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4 signs you should invest in gold now
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Gold has long been a favored investment, but interest in the precious metal has surged in recent years due to mounting economic pressures. With inflation remaining stubbornly high throughout 2022 and 2023, many investors sought out safer assets to protect their wealth, with gold standing out for its ability to hedge against inflation. That increased demand was further fueled by concerns over rising interest rates and persistent geopolitical tensions, which prompted investors to view gold as a stable and reliable option.
As we inch closer to the end of 2024, though, the economic landscape is transforming. Inflation has finally cooled, offering some relief to consumers and investors alike and the Federal Reserve has finally begun cutting interest rates, with more rate reductions expected through 2025. These dynamics are creating an environment where many investors are reassessing their strategies to ensure their portfolios can weather what’s next.
Amid these shifts, though, the case for investing in gold remains compelling. Here, we’ll break down a few signs that you may want to invest in gold now, despite the shifts occurring within the economic landscape.
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4 signs you should invest in gold now
If you’re wondering whether you should invest in gold right now, the following signs could indicate that this is the right moment to make your move:
Inflation has cooled — but risks remain
After a few years of high inflation, the inflation rate has dropped to a three-year low and is now hovering near the Fed’s target of 2%. While this is a welcome relief for many, it doesn’t mean inflation risks have entirely disappeared. The economy can and often does change quickly, and there’s always a chance that inflation could rise again in the future.
Gold has always been a reliable hedge against inflation, maintaining its value when the purchasing power of currencies diminishes. So while inflation is low now, the future remains uncertain. Adding gold to your portfolio, then, could be a way to preserve your wealth if and when the inflationary cycles shift.
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The Federal Reserve has started cutting interest rates
The Fed made its first rate cut in mid-September and analysts expect that these cuts will continue into 2025 — with at least two more 25 basis point cuts expected before the end of the year. This matters because lower interest rates reduce the opportunity cost of holding non-yielding assets like gold.
When rates are low, the appeal of gold increases because investors don’t lose out on the higher interest they could be earning elsewhere. As rates drop, gold becomes more attractive as a store of value, particularly if the Fed continues on this path for an extended period. Lower rates also tend to weaken the dollar, which can further boost gold prices.
Stock market volatility is picking up
While the stock market has remained strong overall this year, there have been a few instances of stock market volatility recently. That can be scary, considering that this type of volatility can result in your portfolio’s value plunging significantly and it can happen in a matter of minutes. If you’re wary of the stock market’s penchant for unpredictable swings, gold could be a way to hedge against this volatility.
When stocks experience sharp corrections or significant fluctuations, gold typically performs well, providing a layer of stability in your portfolio. So, if you’re concerned about the possibility of a more significant market downturn or prolonged volatility, adding gold to your investment mix now can help reduce your overall portfolio risk.
Gold prices are higher than ever
Gold prices have surged to several all-time highs over the last several months, reflecting growing demand for the asset in an uncertain economic climate. While you might hesitate to invest when gold prices are at a peak, many experts believe that gold still has room to grow — and could even reach $3,000 per ounce soon.
If prices continue to rise, getting in now could help you benefit from further appreciation. But if you wait, you could be priced out if gold’s price continues its impressive upward ascent, as many experts expect it to do, at least over the shorter term.
The bottom line
The current economic environment presents several compelling reasons to invest in gold. While inflation has cooled, the Fed’s rate cuts and increased stock market volatility create a landscape where gold’s safe-haven appeal is particularly strong. And while gold prices are at record highs, there’s an expectation that its price may increase over time, so this may be the perfect time to add gold to your investment portfolio — especially if you want to capitalize on future price growth.
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Gold has been a standout performer in the financial markets this year, with prices climbing rapidly and setting new records. At the start of the year, gold was trading at just above $2,000 per ounce, but its value has soared past multiple milestones in recent months, and, today, gold prices hover above $2,650 per ounce. This upward trend has resulted in big rewards for early investors who saw the precious metal as a safe haven in uncertain economic times. Those who got in before prices surged are now enjoying substantial gains.
For investors who have yet to buy gold, though, the current high prices present a dilemma. Many are hesitant to jump in at a time when the price is near a record high and are instead waiting in hopes that prices will retreat, allowing them to purchase gold at a discount. This cautious approach makes sense in traditional investing logic. After all, buying low and selling high is the golden rule. But in the case of gold, waiting for lower prices may not be as wise as it seems.
While it’s tempting to wait for a price drop, the reality is that this gold investing strategy could be fraught with risks — especially right now. Below, we’ll analyze why.
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3 big risks of waiting for gold prices to fall
Waiting for gold’s price to drop could be a risky bet for the following reasons:
Gold’s price may not drop substantially
One of the primary risks in waiting to buy gold at a lower price is the possibility that the anticipated dip may never happen — or may not be as substantial as you hope. Recent trends in the gold market have shown that while gold’s price may experience short-term fluctuations, these dips have not been drastic. Part of the reason is that gold tends to be highly resilient historically, particularly in times of economic uncertainty, like what we’re facing today. Economic issues tend to push the price of gold higher rather than lower.
Even when gold prices have dipped recently, those drops have been short-lived, bouncing back quickly. In some cases, these dips have been quickly followed by the price of gold reaching new highs. This pattern makes it difficult to predict the market. So, waiting for a significant drop could mean missing out on the chance to buy gold at all. If the price continues to rise — and analysts are already predicting that it will — those waiting for a cheaper entry point could be left empty-handed.
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Your portfolio could be vulnerable without it
Gold has long been considered a hedge against stock market volatility, economic downturns and inflation. And while the stock market has performed well recently, it has experienced heightened volatility in recent months. This matters because when the market underperforms or experiences wild fluctuations, gold tends to shine as a stable store of value. This makes gold an essential component of a well-balanced investment portfolio, providing a level of protection against broader market risks.
If you delay investing in gold while waiting for lower prices, you may leave your portfolio vulnerable to future market shocks, should they occur. Gold provides a critical layer of security during such times, and without it, your portfolio may be overly exposed to short-term market shocks that gold could have helped to cushion.
You could miss out on quick returns
While gold is often viewed as a long-term investment, it also presents opportunities for short-term gains, particularly in today’s rapidly rising market. While the price is currently high, many analysts believe that gold’s price is far from reaching its peak — and some experts predict that it could soon hit $3,000 per ounce or higher. If this upward trend continues, buying now — even at the current high prices — could result in significant profits in the near future.
By waiting for a price drop, though, you may miss out on these potential gains. Market timing is notoriously difficult, and even if gold prices were to dip slightly, the price could quickly rebound, leaving those who waited with no opportunity to benefit from the current rally. Investing in gold now could allow you to take advantage of the potential for short-term profits while also securing a position in a valuable long-term asset. And if gold continues to climb, today’s prices may soon seem like a bargain.
The bottom line
Investing in gold has long been a strategy for preserving wealth and protecting portfolios against volatility, so it makes sense to add it to your portfolio, but if you’re waiting for lower prices to enter the market, that may not be the most prudent approach. The price of gold may not drop substantially and delaying your investment could leave your portfolio vulnerable to stock market fluctuations. You might also miss out on an opportunity for both short- and long-term profits. So, given the current trajectory of gold prices and the uncertain economic environment, now may be the right time to consider investing in gold rather than waiting for a dip that may never come.
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