Gold prices are soaring. But investment experts say investors should avoid chasing this glittering thing.

SPDR Gold Shares (GLD), a fund that tracks gold prices, has risen about 11% so far in 2025. The return rate in the past year was about 42%. Gold prices fell more than 1% on Tuesday, and gold futures prices have also risen about 10% so far this year, and are currently up 36% year-on-year. In contrast, the S&P 500 U.S. stock index rose about 1.5% in 2025 and 17% in the past year.

Lee Baker, a registered financial planner, said that a year ago he had not received calls from clients about gold. But now, he often receives such calls.

He believes investors would do well to remember Warren Buffett’s classic rule: “Be fearful when others are greedy, and be greedy when others are fearful.”

Baker is the owner and president of Claris Financial Advisors in Atlanta and a member of CNBC’s advisory board.

Baker said the average investor should have no more than 3% of a diversified portfolio in gold.

He said investors attracted by high returns might have a knee-jerk reaction and buy a big chunk of gold, and in the process they might make the common investment mistake of buying high and selling low.

“If you want to make money with gold, you need to buy and sell gold and hope to sell at the right time,” Baker said. “If you’re in now, are you buying at the top of the mountain? I don’t know.”

Why is gold rising?

Sameer Samana, senior global market strategist and head of global equities and real assets at Wells Fargo Investment Institute, explained that investors often view gold as a safe haven during turbulent times and buy gold assets when uncertainty is high.

“I think we can check that box right now,” he said. Still, “in a moment of real crisis, bonds shine brighter than gold,” Samana said.

Beyond that, many investors buy gold because they believe it’s a good inflation hedge, Samana said. (The data doesn’t always support that investment view.) Recent data suggests progress in reducing inflation may have stalled, which worries investors, he said.

U.S. sanctions on Russia have been a “turbocharger” for gold returns over the past year or so, Samana said.

Sanctions have led some central banks to buy more gold, rather than U.S. Treasuries, to avoid having difficulty accessing dollar-denominated assets in future geopolitical conflicts, he said. Gold’s price has risen as demand has increased compared with prices a year ago.

“Don’t chase the returns in gold,” Samana said. “Overall, at (current) levels, you might want to hold off on buying precious metals.”

Experts don’t expect gold to continue to shine.

“There’s no reason for gold to continue to rise sharply in my opinion, unless there’s some kind of protracted war, which I certainly hope doesn’t happen,” Baker said.

How to invest in gold?

Baker recommends getting exposure to gold through funds such as exchange-traded funds (ETFs) or investing in stocks of gold mining companies, rather than buying physical gold.

Baker said funds and stocks are generally more liquid if investors need to sell assets. Investors with a large amount of physical gold may also need to store it somewhere and insure it, he said. Investors may spend 1%-2% of the value of gold or even more per year on insurance.

Samana shares a similar view to Baker, who also believes that investors can hold 1% to 2% of gold in a diversified portfolio.

Investors interested in buying gold should consider it as part of a broader commodity portfolio, which may include allocations to energy, agriculture and base metals such as copper, as well as precious metals such as gold, he said.

He said Wells Fargo's investment model has an overall allocation to commodities ranging from 2% for conservative investors to 7% for aggressive growth investors.