Interest in gold investing has surged since the start of the year, fueled in large part by a sustained upward trend in gold prices. Over the last 11 months, the price of gold has climbed to new heights while consistently breaking previous price records and attracting even more investors to the precious metal. Given gold’s price trajectory, some analysts have even predicted that the price of gold would reach $3,000 per ounce before the end of 2024.

This month, however, has led to an unexpected twist for gold investors. In early November, the price of gold began to slide, dropping from a near-record high of $2,736.35 per ounce on November 1 to where it sits today at just $2,560.90 per ounce. This downturn has prompted many investors to wonder whether it’s time to reevaluate their precious metal investing strategies. 

Price fluctuations are part of investing, however, especially when it comes to longer-term investments like gold. Still, understanding how to react during such declines can help investors make the most of a dip in gold’s value. And with the potential for gold’s value to fluctuate in the coming months, there are a few moves in particular that investors may want to make now that the price is dropping. 

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3 smart gold moves to make while the price is dropping

Here are three smart moves to consider while gold prices are on the decline:

Dollar-cost average into physical gold

When gold prices retreat from their peaks, implementing a dollar-cost averaging strategy can be particularly effective. Dollar-cost averaging into physical gold is an investment strategy where you buy a fixed dollar amount of gold at regular intervals, regardless of the current market price. Instead of trying to time the market by waiting for prices to drop significantly, this allows you to accumulate gold gradually over time. By investing consistently, you automatically buy more gold when prices are low and less when prices are high, which helps to reduce the impact of short-term market fluctuations on your overall investment.

To start dollar-cost averaging into gold bars and coins (or other types of gold bullion), decide on an amount you can comfortably invest each month (or at another set interval). For example, if you decide to invest $200 in gold each month, you’ll buy $200 worth of gold every month, whether the price per ounce has increased or decreased. Over time, this approach averages out the cost per ounce of gold in your portfolio, potentially lowering the overall price you pay compared to lump-sum investing.

Find out more about the benefits of gold investing here.

Explore gold mining stocks at discounted valuations

Exploring gold mining stocks at discounted valuations can be a strategic way to gain exposure to the gold market without directly buying physical gold. When the price of gold drops, mining companies often see their stock prices decline as well, making these stocks potentially undervalued. So, investing in gold mining stocks now could allow you to benefit from the profitability of these companies when gold prices rebound, as their earnings and stock values generally increase with rising gold prices.

To get started, research well-established mining companies with strong track records and solid balance sheets. Focus on companies with efficient production methods, low debt levels and mines in politically stable regions. This can reduce some of the risks associated with mining, such as production disruptions and regulatory issues, which can impact profitability. During the process, you may also want to explore gold exchange-traded funds (ETFs) to diversify your exposure across several companies.

Rebalance your precious metals portfolio

Market corrections also provide an excellent opportunity to reassess and rebalance your precious metals holdings. So, it may be worthwhile to consider diversifying across different forms of gold investments, including physical bullion, mining stocks and gold ETFs. Each vehicle offers distinct advantages and risk profiles and maintaining a balanced approach can help optimize your portfolio’s performance across different market conditions.

This is also an ideal time to evaluate your overall precious metals allocation within your investment portfolio. While some investors maintain a standard 5% to 10% allocation to gold, your specific percentage should align with your risk tolerance and investment objectives. Use this period of lower prices to adjust your holdings accordingly, ensuring your gold position remains in the recommended proportion.

The bottom line

The key to successful gold investing lies not in reacting emotionally to short-term price swings but in maintaining a disciplined, long-term approach. Whether you’re a seasoned precious metals investor or just beginning to explore gold as an investment option, these market conditions may present valuable opportunities to enhance your portfolio’s position in this enduring store of value.

As you navigate the shifting gold market, though, just remember that gold’s recent price decline doesn’t necessarily signal a long-term trend reversal. Historical patterns suggest that corrections are normal and healthy within broader bull markets. By implementing these strategic moves during price dips, you may be able to strengthen your position and capitalize on future market movements.