Where are gold prices heading? Here's what experts say
Gold prices have been high for some time. In mid-April, spot prices hit $2,048 according to data from the World Gold Council — the highest they've been since the all-time peak of $2,067 in August 2021. They've fluctuated in the weeks since but have largely held near the $2,000 mark.
Investors looking to add gold to their portfolio may wonder how long this trend will last. Are gold prices likely to remain high? Is now a good time to invest in gold? We spoke to some experts to get their takes.
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Where are gold prices heading?
The high prices we've seen recently are the result of interest rate hikes, persistent inflation and worries about a potential recession. Gold is historically considered a safe haven in periods of economic turbulence, so when the financial news is concerning, investors turn to gold to protect their money. This increased demand drives prices up.
And since the news doesn't seem to be improving, some experts believe gold prices will continue to hold steady, if not increase.
"I expect gold prices to move higher in the near term," says Noah Damsky, CFA and principal of Marina Wealth Advisors. "Gold prices can move higher in times of turmoil. Given where we are in the market cycle, I would expect gold to benefit from a bumpy road ahead as a result of debt ceiling discussions, an inverted yield curve and inflationary pressures."
In addition, gold prices are often closely tied to the value of the dollar. When interest rates and inflation are high, the dollar loses purchasing power, and gold prices tend to rise as more investors seek out its stability. For example, in the 1970s, interest rates went from 8.98% to 13.82%, according to the Federal Reserve Bank of St. Louis. Over this decade, gold prices ballooned from $35 to $850, according to data from NASDAQ.
The Fed's latest Consumer Price Index report indicates that while inflation has cooled slightly, it's not likely to go away anytime soon.
"The Fed is very worried about a 1970s type of inflation situation where rates weren't raised high enough and then inflation came back," says Mike Boroughs, CFA, CPA and managing partner of Fortis Financial Group. "So we think the Fed is going to want to be sure it's 'killed' inflation before lowering rates. This means they will likely err on the side of keeping rates where they are for longer than many expect."
Should you buy gold now?
"From a technical perspective, gold is at a major level of resistance being close to all-time highs. Should gold break that resistance with a significant breakout, that could mean the sky's the limit," says Dan Callahan, CFA, partner and chief investment officer at Capasso Planning Partners.
That said, gold's current price is only one thing to consider when deciding whether to invest in this precious metal.
Gold is a valuable part of any portfolio because of its ability to ride out economic storms and provide steady, reliable returns over time. That makes it a wise investment at any time. Getting too caught up in price trends could keep you from enjoying gold's long-term benefits for your portfolio.
"The attractive part about buying gold right now, especially on any pullback, is that gold should perform well in almost any scenario except for the perfect 'soft landing' with inflation and the Fed's hiking of interest rates," says Callahan.
And if past data is any indication, a "perfect" resolution isn't something to bank on.
The bottom line
While some experts predict gold prices will stay at their current level or rise, there are plenty of reasons to invest in gold today. As with any investment, it's important to do your homework and consider your overall goals and risk tolerance.
To begin exploring your gold investing options, request a free investors kit online today.
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