Gold prices may soon hit a record high. Here's why you should invest now.
Amid growing concern among about a potential recession and the fast-approaching deadline before the U.S. defaults on its debt, gold is emerging as a solid choice for many investors today.
After crossing the $2,000 threshold in early April, gold prices have remained around or above that amount in the weeks since. But some experts believe that today's gold prices could be only the beginning of a lasting price surge for the precious metal — thanks to the anticipated global recession and potential U.S. debt crisis, all against the backdrop of persistent inflation and rising interest rates.
If you're looking to invest in gold as prices rise and diversify your portfolio to withstand economic unrest, there are some questions you should have the answers to.
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Could gold hit another record high?
Gold prices today are already near record highs, but there are a few factors leading experts to predict there is still growth ahead.
In fact, in an investment strategy report released this week from the Wells Fargo Investment Institute, strategists now name gold as a "favorable" asset. Gold prices, strategists predict, could reach a target of $2,100 to $2,200 by the end of this year and as high as $2,400 to $2,500 by the end of 2024.
That tracks with expert predictions CBS News previously reported, which ranged as high as $2,500 over the longer term and potentially even reaching $2,100 by this quarter. So far, data from the World Gold Council shows prices still peaking around $2,048 in 2020 and this year's high around $2,037.
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Why are gold prices rising?
A number of converging economic factors play a role in today's rising gold prices.
Still-inflated prices driving down the value of the U.S. dollar, bank failures earlier this year creating some distrust in the banking system among Americans and the potential for a recession are all giving some investors reason to turn to gold.
"As long as the potential for global recession looms, which we suspect that it will for the remainder of 2023, we believe gold and other precious metals should continue to march higher," strategists wrote in this week's Wells Fargo Investment Strategy report.
Most pressingly, there's also the incoming debt crisis should the U.S. face an unprecedented default on its debt in coming weeks which could itself be the catalyst that leads to recession.
While it's impossible to predict the future, we can learn from similar instances in the past, which may have some Americans seeking security in stable investments like gold.
"Back in 2008, gold proved to be a safe haven and appreciated during the worst months of the financial crisis," says Andrew Mastro, CFP, president and founder of Wrought Advisors. "If a U.S. default comes to pass, it's possible that gold may appreciate in price again as more investors seek out assets perceived as safe."
Why should you invest now?
Gold's price — and the expectation that it will continue to rise — is a good reason to add the precious metal to your portfolio today.
Gold is a solid choice for diversification because it tends to perform independently of other assets. That could mean remaining stable while the U.S. dollar loses value or even growing more valuable when the stock market drops. Over time, as the money you have invested in other markets fluctuates, gold may offer some added security.
Just remember, it's not the best idea to move all your investments to gold. Despite uncertainty today, maintaining a diversified portfolio with investments in traditional stocks and bonds — with potential for growth over time — can help you meet your long-term investing goals. Gold is a great diversifier and inflation hedge, but experts recommend keeping your allocation to around 5% to 10% of your overall investments.
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The bottom line
The value of gold isn't only near all-time highs today, but some experts believe it could also continue to increase in the face of economic uncertainty and a potential recession. If you're looking for a way to maintain some stability over the long-term, gold can be a good hedge against other markets and volatility.
