Gold prices are falling. Should I invest now?

While gold prices were rising earlier this year, the spot price of gold is now taking a tumble. This week, the resurgence of the dollar, fueled by hawkish signals from the Federal Reserve, caused the spot price of gold to dip below the threshold of $1,900 an ounce — its lowest value in five months.

But despite the price of gold declining in recent weeks, many investors continue to take advantage of what gold investing can offer. After all, the precious metal has long been considered a good addition to investors' portfolios due to its unique benefits, including its reputation as a safe haven asset.

As with any investment, though, it's important to get the timing right. If you're wondering whether you should invest in gold now that the price is down, it helps to understand a few points.

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Should I still invest in gold right now?

Gold tends to hold its value over time, but it can fluctuate over the short-term due to any number of economic factors. And, that's likely what we're seeing now with the current price trends. But it's important to understand that gold's value has not simply evaporated; it has merely undergone a temporary dip. 

Gold has still accrued substantial gains over the past year, making it is a solid performer despite short-term fluctuations. Last year, the price of gold hovered around $1,700 per ounce — and even at its current price of under $1,900 an ounce, it's still up compared to 2022.

So, should you invest in gold now that the price has declined? The short answer for most people is yes — it does still make sense to invest in gold right now. In fact, this is a good opportunity for investors to buy in at a lower price. 

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Why gold investing makes sense right now

Here's why you may want to take advantage of the opportunity to buy into gold right now.

Gold can hedge against inflation

It appeared in June 2023 that inflation may be cooling, but last month's data showed that inflation actually increased in July. That's bad news for the value of the dollar, as inflation erodes the purchasing power of currency. 

But one of the most attractive attributes of gold is its status as an inflation hedge. Gold has historically demonstrated its ability to retain its value during periods of economic uncertainty and rising inflation. In turn, investing in gold, even during a price dip, is a prudent move to safeguard your wealth.

Gold is a dependable store of value

While the price of gold is down right now, it still has a reputation as a dependable store of value. This protects your investment during times of geopolitical upheaval, economic downturns and market volatility. 

And, considering that the market has been somewhat unpredictable this year — and there are numerous economic and geopolitical issues at play — buying into gold at a lower price presents a good opportunity to add quick, dependable value to your portfolio.

Gold can diversify your portfolio

When the economy declines, the stock market typically does, too. And, with inflation and other factors currently impacting the economy, it's a smart time to diversify your portfolio — just in case the market takes a longer-term downturn.

And, adding gold to your portfolio can be a smart way to do that. Gold doesn't typically follow the trends that occur with other traditional investments, and instead tends to be more valuable when the market declines. This makes it a good option to reduce your exposure to riskier assets and minimize the impact of any losses. 

It offers liquidity and flexibility

Gold's versatility as an asset class cannot be overstated. While it's often associated with long-term wealth preservation, gold also offers the advantage of liquidity. 

If necessary, gold can be quickly converted into cash, offering a degree of financial flexibility that isn't always present in other investment avenues. This liquidity aspect can serve as an invaluable lifeline if you face unforeseen financial challenges.

The bottom line

While short-term fluctuations might cause a momentary dip in gold prices, they hold little significance in the broader context of gold's enduring value. Its ability to hedge against inflation, act as a safe haven and offer liquidity make it a versatile and robust investment choice. And, this is a great time to consider buying in. The price of gold is at its lowest point in the last few months, so you may be able to purchase gold at a discount if you move quickly. And, those who seize the chance to invest in gold while the price is low have the opportunity to reap the benefits of gold for years to come.