Gold prices have been high this year. From October 31, 2022, to May 8, 2023, they climbed from $1,637 per ounce to $2,028.50, according to the World Gold Council — approaching the all-time high of $2,067 set in August 2020.
But there have been times in that span when prices cooled, most recently this past week when the U.S. Labor Department released an encouraging. Whether or not this is a sign gold prices are entering a cooling period remains to be seen. But it may have some investors wondering .
Manypredict gold prices will remain high in the near future, if not rise a bit further. But just how important are prices when it comes to deciding whether you should invest? That's what we'll explore below.
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How much attention should you pay to gold prices?
When deciding when to purchase an asset, price matters more with some than others.investing, for instance, generally follows the old adage of "buy low, sell high." But stocks are extremely volatile, sometimes gaining or losing most of their value overnight. Timing your purchase to capitalize on these swings can pay off significantly.
Gold prices, however, tend to remain fairly stable despite temporary market fluctuations. While the value may rise and fall in the short term, it will rarely do either by such a large amount that you should base your entire investing decision on.
While you could boost your returns by buying when, don't mean you should stay away, either. Rather than trying to time the market, you're better served by viewing gold as a . Whenever you purchase it, it has the power to help you protect your portfolio in several ways.
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Why gold is a valuable investment at any price
Gold's real value as an investment has less do with its price and more to do with theto investors. Specifically:
- It diversifies your portfolio: When assets like stocks and bonds drop in value, gold prices tend to hold steady (if not rise). This makes gold a great way to and , no matter what prices are currently doing.
- It's a hedge against inflation: Gold has an inverse relationship with the dollar. In other words, when the value of the dollar goes down (as it does during ), gold prices tend to go up. This can help preserve your purchasing power and provide if your wallet is feeling the pinch of high prices.
- It helps you weather economic storms: Economic turmoil can devastate your investments. Fortunately, during trying financial events like stock market crashes and recessions, making it a to any portfolio.
The bottom line
Gold prices have been in the news a lot lately, boosting investor interest in the precious metal. But price is only one factor to consider when deciding whether to invest in gold. Take a holistic look at itsand consult a financial advisor if you need guidance on the into your investment strategy.
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