These are the biggest risks of gold investing right now, according to experts
Gold prices have been up and down lately, but while they've dropped from their over $5,300-perounce highs of late last year, they're still well above historical levels. And that has investors interested in gold right now, especially with geopolitical and economic uncertainty mounting,
Still, while gold is largely known as a safe-haven asset, it's not without risk, and experts say there are plenty that could go wrong and bring gold prices down in the near term. What are those risks, though, and are they so major that you shouldn't invest?
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These are the biggest risks of gold investing right now, according to experts
Here's what the pros say you should think about before buying gold right now.
Geopolitics and its impact on oil prices
Uncertainty in the geopolitical climate is one thing to watch for if you're buying gold this year. While uncertainty generally pushes investors toward safe-haven investments like gold and other precious metals, the current conflict in Iran is unique in that it also heavily impacts oil prices and, by extension, the average investor's budget.
"As the oil price rises and falls on Middle East war developments, gold's price will swing,' says Thomas Winmill, portfolio manager at Midas Funds.
Winmill says there's a chance that gold changing from a "currency to a commodity" is a good thing, but a price decline is also possible. He projects potential price swings of 10% to 20% in either direction.
"Geopolitics has taken center stage in setting gold prices over the past year," says Brett Elliott, director of content at the American Precious Metals Exchange (APMEX). "We cannot ignore how war, oil prices, interest rates, and gold prices are all interlinked."
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Rising inflation
Inflation is another marker to keep your eye on. If inflation rises, it could spur the Federal Reserve to increase interest rates, and that typically sends gold prices downward.
"The biggest risk would be a strengthening dollar, which could be a byproduct of the war in Iran," Chris Berkel, investment advisor and president of AXIS Financial, says.
As of February's numbers (the most recent available), inflation is at 2.4%, the lowest the country's seen in a while. If the conflict with Iran continues, though, that could change.
"If war continues to impact oil prices and we see inflation follow, there's a non-zero chance that the Federal Reserve hikes rates, which would be a tail-risk event," Elliott says. "It's unlikely, but we've seen many unlikely things happen in recent years."
Decreased central bank buying
Finally, experts say you should be watching central banks, and more specifically, how much gold they are (or aren't) buying.
"Typically, central bank buying of gold is a precursor to appreciation in the gold price," says Jim Wiederhold, commodity indices product manager at Bloomberg Indices/Bloomberg Index Services Limited. "From 2022 through 2024, central banks around the world bought over 1000 tons annually, and the price of gold nearly tripled."
This year, though, Wiederhold says central banks have drastically reduced their gold buying due to the price volatility. Some are even selling off gold stores to cover oil prices and other expenses.
"Central banks monetizing or selling their gold holdings could suppress prices," Elliott says.
The bottom line
Any investment comes with risk, so if you're considering buying gold right now, make sure the risks are worth the potential reward — especially in today's uncertain economic climate. And remember: Gold is typically recommended as a long-term investment, not a short-term one. That means focusing on its place in your broader portfolio, not just its daily price movements, is important.
