Gold prices are climbing. What experts say about investing now
The price of gold has soared to new heights in 2024, with gold futures surging 14.49% since January 2, 2024. Gold's price per ounce also hit a new all-time high recently following several peaks. In early March, the price punched through to $2,160 per ounce — then a record high. Since then, the price has continued its upward trend, climbing toward its current price of $2,346.33 per ounce (as of April 15).
Evidence that gold was on an upward price trend could be seen in 2023 when gold investing hit an 11-year high as institutional investors turned to gold amid stubborn inflation and the high interest rates aimed at curbing it. So, what's responsible for gold's upward trend? And, amid surging gold prices, is it a good time to buy gold? Here's what the experts say.
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Gold prices are climbing. What experts say about investing now
We consulted several gold experts to better understand the current gold investing environment. Here's what they said.
Why gold is surging
Alex Ebkarian, COO and co-founder of Allegiance Gold, says the price of gold "shot higher and beyond [record highs] due to a confluence of economic and geopolitical issues like rising inflation, a weakening dollar and ongoing geopolitical tensions.
Ebkarian also points to central banks' activity as a contributing factor behind gold's rising prices.
"Central banks, led by BRICS Plus nations, are buying gold at a faster pace and faster rate each month. We are seeing more investments led by central banks in gold as opposed to U.S. treasuries," Ebkarian says.
Plus, the expectations that the Federal Reserve would be dropping interest rates multiple times in 2024 may have contributed to the rising price of gold, says Michael Ashley Schulman, CFA and partner at Running Point Capital Advisors.
"If the Federal Reserve decides to lower rates, as anticipated by many analysts, the dollar might weaken, potentially leading to an increase in the relative value of gold. Lower interest rates also enhance the attractiveness of non-interest-bearing assets like gold," says Schulman.
"In other words, gold may be on an uptrend and hitting new highs partially based on speculation that the Fed will lower interest rates and the dollar will weaken," Schulman says.
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Should investors buy gold now?
Given the soaring price of gold, it's reasonable to question whether there's more room for growth and whether investors should buy now. Joe Cavatoni, market strategist, North America, at the World Gold Council, anticipates that there will be continued gold strength due to numerous factors.
"The environment is strong for gold's performance and our research indicates that when the U.S. market experiences Fed rate cuts, the gold price has performed favorably with an average return of over 8% in the months following," says Cavatoni.
Gold's historical performance is another reason to consider investing in the yellow metal, as Ebkarian points out.
"Gold's 400%+ performance over the past twenty years clearly demonstrates that it's a very good long-term investment and a great portfolio diversifier," Ebkarian says.
What should gold investors be aware of?
While gold is often seen as a store of value, the price of gold can still be volatile, especially in the short term. It's also essential that new investors understand gold isn't an income-producing asset. It doesn't generate dividends or interest, so you're strictly relying on the price appreciation for your returns.
Also, remember that historically, gold may underperform compared to the stock market. Over the last 40 years, gold's price has appreciated 510%, falling considerably short of the S&P 500's 3,200% increase over the same period. And while gold has outperformed the S&P 500 so far in 2024, it may be better to consider gold as a store of value that can stabilize your portfolio rather than focusing solely on its returns.
Timing the market may also be a fool's errand, another reason it's best to invest in gold for its numerous benefits over price appreciation.
"It's hard to predict how high any metal will rise because there are always multiple economic events and geopolitical factors at play, which influence price movement," Ebkarian notes.
The bottom line
Generally, gold's benefits as a hedge against inflation and safe haven make it a useful option worth considering right now. But experts often recommend allocating no more than 10% of your portfolio to gold. You might also consider consulting your financial advisor to determine if gold aligns with your long-term financial plan.
