Gold prices are rising. Is now a good time to invest?

Over the past week, gold prices have nearly pushed back up to the highest on record.

This week, the price of gold topped $2,000 for the first time since its all-time high in summer of 2020 — and some investors believe prices could continue to grow.

"We are approaching a new all-time high, poised to break above the old high … set in 2020 during the heart of the pandemic," says Mel Mattison, CFP, financial services professional and consultant.

Historically, investors have turned to gold to weather times of economic uncertainty. Given the high inflation rates consumers face today, combined with the recent turmoil in the banking industry, some may be turning to the gold market for security now.

If you're wondering if gold could be a good investment for you while prices are high, learn more with a free information kit today.

Is now a good time to invest in gold?

This week, gold prices are near all-time highs. Experts say that's largely due to a few different factors. 

For one, inflationary pressures may cause investor interest in gold to increase, since it's often seen as a potential inflation hedge. Another big factor is that gold tends to perform in opposition to the U.S. Dollar. When the dollar is stronger, gold prices go down — and vice versa. 

"The dollar peaked way back in September of last year," Mattison says. "One month later, in October 2022, gold hit a 52-week low. Hence, the move this year is all about the dollar." 

The dollar's trading peak was around the end of September, according to Barron's data and it has fallen by around 11% since. In the meantime, the price of gold has risen by about 22% since October. 

"The recent banking crisis caused investors to have less faith in the U.S. Dollar," says Dan Casey, investment advisor representative and founder of Bridgeriver Advisors. "In the background, there is always inflationary pressure, as well as investors feeling that inflation will erode our currency, causing more money to flow into gold."

But does that mean you should invest?

There are plenty of factors to consider before you decide to add gold to your portfolio. Consider speaking with an expert to decide if gold is right for you. 

Should you add gold to your portfolio?

Gold is often viewed as a hedge against inflation, and it can be a good way to diversify your investments.

"Gold often moves according to the beat of its own drummer," Mattison says. 

Diversification with different types of assets, including gold, may be a good way to weather periods of uncertainty in certain markets by lowering your own investment risk. No investment is guaranteed, but a diverse portfolio may help protect yourself over the long run.

Before you decide to invest, make sure you understand your own risk tolerance, the complexities of your portfolio and the ways a new investment might change your long-term investing strategy. There are pros and cons to every investment type, including gold.

Learn more about your options with gold investing with a free information kit today.