4 signs you should invest in gold now

Gold has long been a favored investment, but interest in the precious metal has surged in recent years due to mounting economic pressures. With inflation remaining stubbornly high throughout 2022 and 2023, many investors sought out safer assets to protect their wealth, with gold standing out for its ability to hedge against inflation. That increased demand was further fueled by concerns over rising interest rates and persistent geopolitical tensions, which prompted investors to view gold as a stable and reliable option. 

As we inch closer to the end of 2024, though, the economic landscape is transforming. Inflation has finally cooled, offering some relief to consumers and investors alike and the Federal Reserve has finally begun cutting interest rates, with more rate reductions expected through 2025. These dynamics are creating an environment where many investors are reassessing their strategies to ensure their portfolios can weather what's next.

Amid these shifts, though, the case for investing in gold remains compelling. Here, we'll break down a few signs that you may want to invest in gold now, despite the shifts occurring within the economic landscape.

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4 signs you should invest in gold now

If you're wondering whether you should invest in gold right now, the following signs could indicate that this is the right moment to make your move:

Inflation has cooled — but risks remain

After a few years of high inflation, the inflation rate has dropped to a three-year low and is now hovering near the Fed's target of 2%. While this is a welcome relief for many, it doesn't mean inflation risks have entirely disappeared. The economy can and often does change quickly, and there's always a chance that inflation could rise again in the future. 

Gold has always been a reliable hedge against inflation, maintaining its value when the purchasing power of currencies diminishes. So while inflation is low now, the future remains uncertain. Adding gold to your portfolio, then, could be a way to preserve your wealth if and when the inflationary cycles shift.

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The Federal Reserve has started cutting interest rates

The Fed made its first rate cut in mid-September and analysts expect that these cuts will continue into 2025 — with at least two more 25 basis point cuts expected before the end of the year. This matters because lower interest rates reduce the opportunity cost of holding non-yielding assets like gold. 

When rates are low, the appeal of gold increases because investors don't lose out on the higher interest they could be earning elsewhere. As rates drop, gold becomes more attractive as a store of value, particularly if the Fed continues on this path for an extended period. Lower rates also tend to weaken the dollar, which can further boost gold prices.

Stock market volatility is picking up

While the stock market has remained strong overall this year, there have been a few instances of stock market volatility recently. That can be scary, considering that this type of volatility can result in your portfolio's value plunging significantly and it can happen in a matter of minutes. If you're wary of the stock market's penchant for unpredictable swings, gold could be a way to hedge against this volatility. 

When stocks experience sharp corrections or significant fluctuations, gold typically performs well, providing a layer of stability in your portfolio. So, if you're concerned about the possibility of a more significant market downturn or prolonged volatility, adding gold to your investment mix now can help reduce your overall portfolio risk.

Gold prices are higher than ever

Gold prices have surged to several all-time highs over the last several months, reflecting growing demand for the asset in an uncertain economic climate. While you might hesitate to invest when gold prices are at a peak, many experts believe that gold still has room to grow — and could even reach $3,000 per ounce soon. 

If prices continue to rise, getting in now could help you benefit from further appreciation. But if you wait, you could be priced out if gold's price continues its impressive upward ascent, as many experts expect it to do, at least over the shorter term.

The bottom line

The current economic environment presents several compelling reasons to invest in gold. While inflation has cooled, the Fed's rate cuts and increased stock market volatility create a landscape where gold's safe-haven appeal is particularly strong. And while gold prices are at record highs, there's an expectation that its price may increase over time, so this may be the perfect time to add gold to your investment portfolio — especially if you want to capitalize on future price growth.