Gold as an inflation hedge: does it still work?
Gold is the asset most commonly associated with inflation protection, and the evidence is mixed rather than one sided. A 2017 study published in Resources Policy found evidence that gold and the UK Retail Price Index moved together over long periods dating back centuries, concluding that gold offered some protection against inflation over the very long run.
Other research reaches a different conclusion. Erb and Harvey (2013) tested the inflation hedge claim directly and found gold unreliable as a hedge across time horizons from one to 20 years, according to analysis published by the Evidence Investor in April 2026, which draws on the 2026 UBS Global Investment Returns Yearbook.
Separate research by Bampinas and Panagiotidis, published via ScienceDirect in November 2024, found gold’s inflation hedging ability was generally weaker in the UK than in the US.
Historical UK data compiled by BullionVault shows gold lost close to four fifths of its real value between 1980 and 1999, a period when UK equities continued gaining in real terms despite average inflation of around 4% a year. That data draws on the Office for National Statistics long run Retail Price Index series and Bank of England interest rate records.
