For more than a year, the Federal Reserve has enacted adesigned to lower inflation. While you've probably felt the pinch in your wallet, you may also be experiencing it in your investment portfolio, as the economic environment spurs market volatility.
During periods of uncertainty like we're facing today, some investors turn toto help mitigate some of the risks they may be facing elsewhere.
Gold can be a, depending on your individual goals and overall portfolio. But with today's still-high inflation and rising rates, as well as concerns about a — you may want to consider just how it can .
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Should you invest in gold as interest rates rise?
Here are a few reasons why gold can make a good investment option in today's high rate environment.
Gold can help you diversify
is an important part of your investment strategy no matter what state the market is in. during volatile markets since its performance doesn't generally follow the ebbs and flows of stocks. So, when other aspects of your portfolio are down, an asset like gold may help you stay afloat.
However, it's important to diversify in a way that makes sense for you. Investing in gold amid high inflation and rising interest rates doesn't mean that you should give up longer-term investment growth out of fear. Many experts recommendof your portfolio in assets like gold, so you can maintain the larger growth potential of traditional markets over time.
"There are always going to be two or three major topics weighing on markets to cause investors to become nervous," says Scott Sturgeon, CFP, founder of Oread Wealth Advisors. "Getting past those mental obstacles can go a long way in determining which investments are a good fit for your risk tolerance and financial needs."
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Gold prices are rising
Over the past few months, gold prices have continually risen and even nearly overtook their all-time high. Experts believe that's largely due to a combination of inflationary pressure and the recent— leading people to as a form of stability.
While it's difficult to predict the future, some experts believe that gold prices could stay high or keep rising in the months to come. "From an investor perspective, we didn't see the peak yet," Baruch Silvermann, investor and CEO of The Smart Investor, a financial education website recently told.
Despite, rising interest rates don't necessarily correlate with rising gold prices. In fact, gold's price dropped when the Fed first started raising rates in March 2022. But rate hikes won't persist forever and as a safe haven asset can benefit you even as prices fluctuate.
A free investment guide can help you learn more about gold investing today.
Gold can offer a hedge against inflation
The catalyst for today's rising interest rates is largely attributed to runaway inflation that has made everything from groceries to fuel to travel more costly since the pandemic.
Though rising rates are designed to bring down inflation, it could still be a long time before that happens. Rate increases have marginally, but it's still far from the Fed's 2% target.
As ongoing inflation continues to keep the value of the U.S. dollar down, that could be a good indicator of the value of gold. Historically,tend to do well when inflation reduces the spending power of the dollar. So, like many people have turned to gold as a in the past, it may be worthwhile now as inflation continues to have an effect on your spending.
The bottom line
As interest rates rise, there are a few reasons you may consider investing in gold today. Ongoing inflation and other factors affecting the value of the dollar have led to rising gold prices, and the asset remains a good way to diversify and potentially hedge against inflation over time.
If you're considering adding gold today, make sure you take your entire portfolio and long-term financial plan into account, so you can determine the right allocation and gold investment for you.
Learn more about gold investing now with a free investors kit.
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