Gold Prices Fall Further After Worst Quarter in Over a Decade - Is It Still Worth Owning?

Your retirement portfolio is one measure of your financial fitness, and if gold is in your portfolio, you might have noticed a recent dip in its value. While gold is often promoted for its ability to diversify your portfolio and as a hedge against inflation and geopolitical risk, gold's steep decline may have you wondering if it should still be in your investment portfolio.

Several factors are affecting the fall in gold prices, and it's important to understand just what's happening so you can decide if you want to invest in gold.

The drop in gold prices

Gold started off the year strong, soaring to a record high of approximately $5,600 an ounce in January 2026. However, gold prices tumbled by 25 to 28%, reaching $4,000 an ounce by late June. Gold is down nearly 8% in 2026, having had its worst quarterly performance in over a decade. 

Factors contributing to the drop in price

Inflation remains high, casting doubt that the Federal Reserve may cut rates, and such expectations are impacting gold prices. Seeing as the Fed may now increase interest rates and there's doubt about when the Iran war may end, the gold market is uneasy as prices fall.

The strength of the U.S. dollar also has an intrinsic relationship with gold prices. As the dollar rises in strength, gold prices tend to drop. The dollar is currently strong, easing from a 15-month high, which may prompt a decline in gold prices. As the dollar increases in strength, gold is more costly to international buyers, so it loses some of its appeal and its price declines.

Is gold still worth owning

Some analysts predict that gold may rebound in 2026, meaning there's opportunity for investors. For example, JPMorgan predicts that gold should reach $6,300 per ounce this year, and the price increase may be driven by central bank buying and increasing global tension. 

U.S. Gold & Coin reports that only 10.8% of the population invests in physical gold, a fact that may indicate that there's still an investment opportunity. Considering the economic uncertainty the United States faces, it's possible that interest in gold bars, bullions, and coins may increase, leading to higher prices and more demand. If tensions with Iran ease, more people may start buying gold again, driving prices up.

The negative perspective on gold prices

While some analysts predict gold prices may increase in 2026, others have a more negative outlook. Barron's senior technical analyst Doug Busch predicts that gold might reach a low of $3,750 this summer.

Katie Stockton, founder of Fairfield Strategies, wrote in a report that she felt a substantial rally in gold prices this year would be unlikely.

The downside to gold investments

Gold is traditionally seen as a safe haven investment, but fear is prompting investors to seek out assets that provide higher yields than gold, such as bonds. For example, since the U.S. 10-Year-Treasury is yielding above 4.4%, long-term bonds offer a more attractive yield to investors than gold. Gold markets, as a result, are becoming more sensitive to inflation.

Gold prices have become more volatile than they traditionally are. For example, gold experienced a 14% drop in value in just three days between the end of January 2026 and February 2. While gold may still be an appealing investment, it's important to understand that it may quickly undergo more significant price fluctuations than it previously did.

How gold is typically used in investment portfolios

Most investors don't invest primarily in gold, but rather use gold as a small diversification or inflation hedge in a portfolio. Since gold has become more volatile, it may be advisable to ensure that gold investments only make up a small portion of your portfolio.

At the same time, gold's near-term volatility may not necessarily change its long-term value and use for retirees who could let their gold investments sit for years until they rebound. Gold is often best when viewed as a long-term investment that serves to diversify your portfolio.

Bottom line

It's natural to worry about the decline in gold prices if you have investments in gold, but remember that gold tends to be a long-term investment, so there's still time for the market to rebound. Analysts have mixed perspectives on what's next to come for gold values, so it may be best to not react quickly to a single bad quarter and to instead wait and see how the gold market evolves.

If you hold gold in your investments, this may be a good time to think about your allocation size and your time horizon, rather than making an immediate change because of current prices. Whether you're ready to start investing or you think it's time to reevaluate your portfolio, consider talking with a financial advisor before buying or selling because of short-term price swings that haven't yet fully played out.