3 moves to avoid as gold's price rises

The price of gold is rising … and rising … and rising. That's what many investors have monitored in recent months as the price of the precious metal has surged by more than 15% since January 1. At that point, gold was worth $2,063.73 per ounce but, as of May 17, it was selling at $2,381.92 for the same ounce. That's a significant bump for any asset, particularly one known more as a safe haven versus an income generator.

Still, gold is considered a hedge against inflation due to its ability to maintain and rise in value during inflationary periods like we are still experiencing. So it's understandable if beginners want to get started now, even with the price continually heading upward. That said, there are some strategic moves gold investors should make right now to avoid being blinded by the shiny new price. Below, we'll break down three of these mistakes to avoid to better improve your chances of gold investing success right now.

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3 moves to avoid as gold's price rises

Here are three things prospective gold investors should avoid doing as the price of the precious metal continues to rise:

Don't overinvest

By looking at the gold price chart in 2024 it can be tempting to invest more than you should right now. But that wouldn't be a beneficial move. Whether the price is rising or stagnant, gold should be limited to 10% or less of your overall portfolio. This will let other, more volatile investments perform better and give you a chance to earn some income in the process. Gold, no matter how much it rises in price, is generally a better way to diversify your portfolio and protect other assets. So don't let a rising price change reliable investing advice.

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Don't look to make a quick profit

Sure, if you bought gold in January and sold it this month you will have made a relatively quick profit (for gold, that is). But don't look to do that regularly right now. Again, gold is generally more effective as an inflation hedge and portfolio diversifier than it is for a way to get rich quickly. So don't let the price dissuade you. While you can theoretically make a quick profit right now, it's not the approach to take to ensure long-term success. Plus, the stock market is hot right now - you may want to invest more there.

Don't wait for the price to fall

A rising price, for some investors, may mean that now is not the right time to invest in gold. But waiting for the price to fall may be a mistake. For starters, there's no strong indicator that the price will drop significantly. Inflation is stubborn (although cooled) and interest rates remain stuck at a 23-year high - both factors that cause investors to turn to gold and, thus, cause the price to rise (not fall). And even though there have been drops in the price in the recent past, gold, overall, tends to only move in one direction: up. So if you wait for the price to fall to get started you may find yourself waiting a long time (and you'll miss out on the protections it can provide in the interim).

The bottom line

As the price of gold continues to rise, it can behoove investors to get started now. To improve their chances of success, however, they should avoid overinvesting in the precious metal and they should fight the urge to make a quick profit amid the price volatility. Finally, they should be smart about the historic price performance of the yellow metal and understand that waiting for an opportune time for the price to fall may never surface. 

Have more questions about gold investing now? Find out more here today.