What Is The Average Return On Gold?

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Gold investments have seen an average annual return of 12.44% over the past decade, 9.84% in 20 years, and 8.3% in 30 years. However, some years have seen negative returns, such as 2015 and 2018.

Using gold as a means of value exchange is perhaps the oldest form of trading, ever since the Ancient Egyptians started using it for international trade three and half thousand years ago. Today, gold is traded not only as a form of wealth storage and as a long-term investment, but as a hedge against inflation and for portfolio diversification. Investors trade in physical gold, gold futures contracts, gold ETFs, and even stocks of gold mining companies. But how much can traders make from trading gold? Traders Union is here to answer that question for you.

What is the annual return for gold?

As a commodity, gold tends to be a volatile asset. Multiple factors can affect its price, such as inflation reports, geopolitical tensions, or even a miners’ strike. Gold’s value can fluctuate significantly, rising during times of high inflation, or falling when the US dollar is strong. Yet, over time, the value of gold on average has consistently and considerably grown, despite periods of temporary downturn. Its continuous growth can be attributed to several factors; its finite supply, increasing demand across various industries, and investors’ tendency to keep huge amounts of gold for storage of value.

If we look at the return on gold investments over the past 50 years, returns average out at around 7%. When looking at the numbers in a shorter period, such as 20 years, average returns are closer to 8.65%.

You’d be forgiven for thinking that gold investments guarantee returns for years to come. However, gold is incredibly volatile, and if we look at the returns for each year, we get a different picture. For example, in 2020, gold gave investors a return of over 20%, due to a sudden surge of gold investment at the onset of the pandemic. In 2022, returns stood at just 0.44%. In fact, returns were negative in 2018, 2015, and 2013. Because of the way averages work, they paint a picture of consistent growth. In reality, the most important factor for positive returns is when you decide to invest.

Annual return of gold

Has gold outperformed the S&P 500?

Out of the most common trading assets and their average annual returns over the past 50 years, from 1971 to 2026, gold has performed moderately well. Stocks in the US market, and commodities, have returned higher average yields compared to the gold market. Emerging market stocks (EM), US bonds, and US cash, have all generated lower average annual returns than gold. The numbers for each can be seen in the table below.

Figure 1 Annual Average Returns across financial markets for 50 years

The S&P 500 stock index has performed considerably better than all these financial markets. As a market-capitalization-weighted index of 500 of the leading publicly traded companies in the U.S., it is naturally going to perform well over several decades. Since 1957, the average annual return has amounted to 11.88%. Like gold though, it has seen several years where returns have been negative, most recently in 2018 and 2022. So, although it has seen a consistent trend of general growth over time and on average nets positive returns, the crucial factor in generating a positive yield is knowing when to invest.

Figure 2 S&P 500 Average Annual Returns

How to Start Trading Gold?

If you’d like to take advantage of the generally positive returns offered by trading gold, you can do so- by following these steps.

Open Account: Research and choose a reputable and reliable brokerage platform that offers gold trading services. Open an account with them, providing the necessary personal and financial information for registration.

Best brokers to trade gold
	Plus500	OANDA	FOREX.com
Gold
Min. deposit, $	100		100
XAU/USD spread, pips	45	30	35
XAU/USD commission, $	3	3	2.5
Regulation	CySEC, FCA, ASIC, FMA, FSCA, FSA Seychelles, EFSA, MAS, DFSA, SCB	FSC (BVI), ASIC, IIROC, FCA, CFTC, NFA	CIMA, FCA, FSA (Japan), NFA, IIROC, ASIC, CFTC
Open an account	Go to broker 80% of retail CFD accounts lose money.	Go to broker Your capital is at risk.	Study review

Choose Asset: Decide whether you want to trade futures contracts, exchange-traded funds (ETFs), or Contracts for Differences (CFDs). Futures and CFDs tend to involve higher risk, while ETFs are a more straightforward way for beginners to start trading gold.
Make Trading Decisions: Next, you need to start trading. Stay informed about factors influencing gold prices, then develop a trading strategy that aligns with your risk tolerance and financial goals. Implement stringent risk management practices to protect your capital. Keep an eye on any market developments, then review and adjust your trading strategy accordingly.

A moderate position is often more effective

In my view, gold works best when it is approached with realistic expectations rather than as a shortcut to quick profits. I would not recommend treating it as an asset that should constantly outperform equities or generate steady returns every year. Instead, I see it as a tactical and strategic component of a broader portfolio – one that can play different roles depending on the market environment.

If I were advising a beginner, I would suggest starting with a clear purpose: are you using gold for short-term trading, inflation protection, or portfolio balance? That choice matters, because the same asset behaves very differently depending on your time horizon. I also believe it is a mistake to allocate too much capital to gold too early. A moderate position is often more effective, since it gives you exposure to its defensive qualities without making your results overly dependent on one macro theme.

Another point I consider important is patience. Gold can spend long periods moving sideways or reacting sharply to shifts in rates and sentiment. Because of that, I prefer to enter gradually rather than all at once, especially in uncertain conditions. This approach reduces timing risk and makes the position easier to manage emotionally.

Conclusion

Gold's track record demonstrates that, while its annual returns have averaged between 7% and 12% depending on the timeframe, it remains a highly volatile asset with periods of both stellar gains and notable declines. Although gold doesn’t always outperform the S&P 500, it offers strategic value as a hedge against inflation and a tool for diversification within a portfolio. For instance, gold surged over 20% in 2020 amid global uncertainty, but returned just 0.44% in 2022—a clear reminder of its unpredictability. The key takeaway is that timing and purpose are crucial: gold is most powerful when treated not as a quick-profit vehicle, but as a measured, long-term component in a balanced investment strategy. Ultimately, patient and moderate exposure to gold can help investors weather market turbulence and safeguard wealth over time.

FAQs

What factors most influence the average return on gold investments?

The average return on gold investments is influenced by factors such as inflation rates, geopolitical tensions, fluctuations in the US dollar, mining supply, and overall investor demand. Economic conditions and global events often cause the price of gold to rise or fall sharply.

How does gold perform as a hedge against inflation compared to other assets?

Gold is commonly used as a hedge against inflation because its value often rises when the purchasing power of fiat currencies declines. While gold has outperformed certain asset classes like cash and some bonds over long periods, it has not consistently outperformed equities such as the S&P 500.

What are the risks associated with short-term gold trading?

Short-term gold trading carries the risk of significant price volatility, with returns varying dramatically from year to year. Factors like market sentiment and macroeconomic reports can cause sharp movements, leading to potential losses, especially if entry and exit points are poorly timed.

Why is portfolio diversification important when including gold?

Including gold as part of a diversified portfolio helps manage risk, as gold often behaves differently compared to stocks or bonds. This diversification can smooth overall portfolio performance by reducing reliance on any single asset's performance, particularly during periods of market uncertainty.

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Team that worked on the article

Jason Law is a freelance writer and journalist and a Traders Union website contributor. While his main areas of expertise are currently finance and investing, he’s also a generalist writer covering news, current events, and travel.

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Dr. BJ Johnson is a PhD in English Language and an editor with over 15 years of experience. He earned his degree in English Language in the U.S and the UK.

Mirjan Hipolito is a journalist and news editor at Traders Union. She is an expert crypto writer with five years of experience in the financial markets.

CFD

CFD is a contract between an investor/trader and seller that demonstrates that the trader will need to pay the price difference between the current value of the asset and its value at the time of contract to the seller.

Diversification

Diversification is an investment strategy that involves spreading investments across different asset classes, industries, and geographic regions to reduce overall risk.

Volatility

Volatility refers to the degree of variation or fluctuation in the price or value of a financial asset, such as stocks, bonds, or cryptocurrencies, over a period of time. Higher volatility indicates that an asset's price is experiencing more significant and rapid price swings, while lower volatility suggests relatively stable and gradual price movements.

Index

Index in trading is the measure of the performance of a group of stocks, which can include the assets and securities in it.

Yield

Yield refers to the earnings or income derived from an investment. It mirrors the returns generated by owning assets such as stocks, bonds, or other financial instruments.

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