What investors should know about buying gold right now
When it comes to investing, you have plenty of options to pick from. Many opt to put money into traditional investments, like stocks, due to the potential for significant short-term gains. But while the stock market may provide an opportunity for quick returns on your investments, it's also a risky bet.
All it takes is an economic downturn or a volatile market for your stocks to take a nosedive, and it's not unusual for investors to see hefty losses in a matter of days — or even minutes. That's why it's important to diversify the investments in your portfolio. You need to balance the riskier investments with more stable options.
And, one option that many people turn to is gold, which tends to be a reliable asset. By investing in gold, you can help offset some of the risk posed by your other investments — and can also reap other benefits, like hedging against inflation. But if you want to add this precious metal to your portfolio, there are a few things you should know right now.
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What investors should know about buying gold right now
Here's what investors should know about investing in gold right now:
Gold prices are currently fluctuating
Last week, a range of economic factors caused the price of gold to dip below the $1,900-an-ounce mark — a five-month low. But in a surprising turn of events, the spot price of gold saw an increase to over $1,890 an ounce on August 21, marking a swift recovery from the recent dip.
And, a similar pattern occurred with gold futures. The gold futures expiring in December saw positive movement on the same day, rising 0.3% to $1,921.95. These shifts underscore the nature of the gold market, where prices can change rapidly based on a variety of factors.
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Short-term price volatility is normal
While gold doesn't experience as much volatility as other types of investments, it's important to remember that short-term price volatility is normal for gold. Fluctuations in gold prices can happen due to various global economic and geopolitical factors, including interest rates, inflation concerns, currency fluctuations and market sentiment. We're dealing with many of those issues right now, so the current price volatility makes sense.
Rather than being deterred by these fluctuations, investors should approach them with a strategic mindset. Real price growth tends to happen over the longer term. In turn, this precious metal tends to be the best fit for investors who are looking to offset risk in their portfolios but aren't looking for significant shorter-term gains.
And, it's worth noting that the spot price of gold is still up overall compared to last year, despite the recent price drop. Right now, gold prices are just under $1,900 per ounce, but were below $1,700 this time last year.
If you want a deal, you'll need to move quickly
Gold prices are still low compared to what they were five months ago, but the spot price and gold futures are exhibiting signs of potential recovery. So, if you want to capitalize on the current lower price point, you need to act quickly.
Because gold prices tend to be relatively stable overall, it's important to take a proactive approach to leverage favorable price movements. Otherwise, there may not be another opportunity to buy in at a lower price in the near future.
The bottom line
The recent dip in gold prices presents a timely opportunity for investors to consider adding this precious metal to their portfolios. While short-term price volatility is a natural part of the investment landscape, the enduring benefits of gold as a diversification tool, inflation hedge and store of value make it an attractive option for both experienced and novice investors alike.
And, as the spot price and gold futures show signs of potential recovery, now is the time to capitalize on this unique investment opportunity. But if you wait to see where gold prices go, it could cost you more in the long run.
