UPDATE: The battle between gold and UK shares intensifies as 2025 wraps up, with gold surging 50% year-to-date compared to the FTSE 100 index’s impressive 18% rise. Investors are now left wondering which asset class will deliver higher returns in 2026.
Gold is riding a robust upward trend, driven by factors such as soaring government deficits, geopolitical tensions, and waning confidence in the US dollar. Many experts predict that gold could challenge the $5,000 per ounce mark in 2026, with firms like Metals Focus, Goldman Sachs, and JP Morgan supporting this forecast.
Currently, gold is benefiting from a market frenzy, but analysts caution that its recent sharp rise might not be sustainable. Historical trends indicate that parabolic price movements often lead to corrections, potentially disappointing investors in the coming year. With no earnings or income tied to gold, its valuation remains uncertain.
On the other hand, UK shares are also experiencing a significant uptick, with the FTSE 100 showing a remarkable 18% growth this year. However, analysts project that these gains may not be replicated in 2026. Notably, large constituents like HSBC and Rolls-Royce have witnessed substantial increases, with Rolls-Royce soaring nearly 100%.
Despite the overall market performance, individual UK shares present promising potential. The London Stock Exchange Group (LSEG), currently trading at approximately £94, holds an average analyst price target of £124, suggesting a potential upside of around 32%.
Several factors could drive LSEG’s share price higher, including the launch of new AI products in collaboration with Microsoft, a large share buyback, and a shift towards ‘quality’ in the stock market. Despite risks such as customer spending and competition, many believe LSEG could outperform gold in the next year.
As 2025 comes to a close, investors should closely monitor these developments. The question remains: will gold maintain its momentum, or will UK shares offer better opportunities for profit in 2026? Stay tuned for updates as this financial narrative unfolds.
