2 factors influencing gold prices now

Gold prices have had a successful few weeks.

After nearly topping all-time highs last month, the price of gold has remained steadily near or above the $2,000 threshold for several weeks now — where some experts believe it could remain or even surpass.

But why is gold faring so well? It has a lot to do with what makes gold a good prospect for long-term investors in the first place. As a historically secure investment choice, concerns over inflation and a potential recession, in particular, may have more people considering investing today. 

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2 factors influencing gold prices today

Over the past several months, many aspects of our financial lives have been pretty tumultuous. From high inflation and rising interest rates to a banking crisis, there's been no shortage of volatility. 

For investors, gold can act as a hedge against inflation and a way to offset losses during a recession. As more people invest in gold, it can push the value of it higher — which may offer even more benefits for investors.  

Inflation

As inflation continues to make the costs of everything from homes to energy travel more expensive, it also pushes down the value of the U.S. dollar. 

And while the Federal Reserve's ongoing interest rate hikes have helped mitigate the 8% to 9% inflation rates of a few months ago, prices are still high. The latest Consumer Price Index shows that prices were still up year-over-year by a total 4.9% in April. 

But gold tends to hold its value during periods of high inflation and often charts an inverse relationship to the value of the dollar. Investors looking to gold as an inflation hedge may be one factor in today's high gold prices. Though we can't predict where prices may go in the future, putting some money in gold today could be a good way to help offset some of the effects of inflation while it remains high. 

Explore how you can invest in gold today with a free investment guide.

Concerns over a recession

Another factor in the rising value of gold — and investors' interest in it — is the potential for a recession in the coming months. 

Not only has the Federal Reserve said a "mild recession" could be likely this year, but many Americans are also anticipating a downturn, amid higher prices, bank failures and overall uncertainty. 

Because gold tends to remain steady even as traditional stock and bond markets are down, diversifying with gold is often a good way to withstand market downturns. Diversification is a smart investment strategy in any economic environment, but when facing uncertainty, it can be helpful to maintain some security within your portfolio.

The bottom line

Gold prices have been up in recent weeks, and some believe they could continue to rise — at least as long as inflation remains an issue and recession remains a possibility. If you're looking for a way to protect your portfolio against volatility, it could be worth considering whether investing in gold is right for you. 

As with any investment, make sure your plans align with your long-term investment goals. Many experts recommend keeping any gold investments around 5%, so you can still realize gains from traditional markets over time. If you're unsure, consider speaking with an expert, like a financial advisor, about your options.

Learn more about how to invest in gold with a free investors kit.