Gold prices are low. Here's why you should invest now.
Alongside the broader economy, gold prices have experienced some significant changes in 2023.
The price of gold grew to near-record highs earlier this year, before moving steadily downward over the past two months. Today, gold's price is nearly the same as it was in early March, according to spot price data from the World Gold Council.
But for long-term investors, a price dip shouldn't be any reason for concern — after all, gold's benefits lie in its stable value over longer periods, rather than any short-term price movements. Even if prices are lower today, there are plenty of reasons to consider adding the precious metal to your portfolio.
Now could be a good time to start investing in gold. Learn about your options with a free information kit.
Why are gold prices down?
Like any market, a number of factors can affect the price of gold at a given time.
Most recently, the Fed's decision to pause federal interest rate hikes — while leaving the door open for more rate hikes to come later this year — may be a factor influencing gold prices.
"Gold prices are highly sensitive to the Fed's interest rate decisions and they have fallen right after the last meeting, tracking the mixed signals from the market," said Ohan Kayikchyan, CFP, founder of Ohan the Money Doctor in the days following the rate pause.
New economic data showing a strong economy, too, could have some forgoing the safety of gold. The value of the dollar (which tends to move inversely from gold) has strengthened since the Fed's decision, consumer confidence is up and the job market has stayed resilient.
That's in contrast to earlier in the year, when gold's value was higher thanks to ongoing inflation and fallout from the banking crisis, as well as the U.S. nearly defaulting on its debt. You might think about it in terms of demand: When the economy feels tumultuous and other markets are volatile, investors often turn to gold as a safe haven. When the economy is strong, investors may be willing to take on more risk, investing more in the stock market.
Find out how gold can fit into your portfolio in any economy with a free investors kit today.
Why you should still invest in gold now
If there's one thing to know about investing in gold, it's that gold's value within a diversified portfolio isn't necessarily for any short-term price growth. Instead, gold is a valuable asset because it moves independently from other markets, offers relative stability over time and is a good hedge against inflation.
While gold cannot help you grow wealth the same way you can with traditional stock market investments, it can help you weather periods of economic uncertainty.
Gold's performance over the past few years is a great example. In 2022, gold prices in December were relatively close to where they began in January, with some movement in between. The S&P 500, meanwhile, ended the year down by more than 19%.
2022 is a great example of one of the benefits of gold. Even if its value is slightly lower today while other markets are strong, gold's value can hold over time, helping you weather periods of downturn.
That's also why experts recommend allocating only a small portion of gold to your portfolio. With just 5% to 10% of your overall investments dedicated to gold, you can leave plenty of room for your stock market investments to grow, while maintaining some security when markets are down.
Find out the best gold investment options for your portfolio today with a free investment guide!
The bottom line
The price of gold may be slightly down from where it was earlier this year, but gold can still bring value to your portfolio. Long-term investors can benefit from gold as a safe haven and stable asset in any economy. If you're thinking about adding gold to your portfolio, consider speaking with an expert who can help you navigate your options and individual investment plan. Start by learning more about how you can benefit from gold with a free information kit now.
