Will gold's price rise continue this May?
It may feel like ancient history right now, but it wasn't that long ago that the price of gold was just around $2,000. In early January 2024, for example, gold was priced at $2,063.73 per ounce, making it a relatively affordable way to protect your portfolio and diversify your assets. But that price has changed dramatically since that point, with the latest in a series of price records surpassed this April when the cost of the metal surpassed the $3,400 per ounce mark. Now a bit under that milestone at $3,315.69, the precious metal is up by more than $1,300 per ounce in under 18 months. Or, put another way, the price of gold has surged by more than 60% since the start of 2024.
And while this could be a positive development for both current investors and those now considering the yellow metal, the inevitable question surrounding future price movements is now pronounced, particularly considering the wider economic developments that have taken place this April. Specifically, will gold's price rise continue into this May? Or will the market start to reverse course? That's what we'll analyze below.
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Will gold's price rise continue this May?
As long as the conditions that have steadily driven gold's price to rise over the last 18 months, approximately, remain significant in May, then, yes, gold's price is likely to continue to rise in the month, minus the inevitable (and occasional) minor declines the price usually experiences. Here are three items that will likely keep the price elevated in May:
Domestic economic concerns: Stock market volatility is a great indicator of where gold prices are heading. If this uncertainty continues in May and stocks and bonds continue to be impacted in a negative way, then more investors will likely turn to gold for the safe-haven protection it offers. Accordingly, the price of the metal will increase with this increased demand, potentially pushing the price of the metal comfortably past the $3,500 milestone.
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Interest rate policy: There's a widely held belief that the Federal Reserve will cut interest rates later this year. But it looks highly unlikely to be when the central bank meets again on May 6 and May 7. While rate cuts can cause gold's price to fall, rate increases or even rate pauses typically keep the price of gold high (as can be seen for much of the last three years). With no rate changes on the immediate horizon, then, gold prices could easily tick up again in May (just keep an eye out for changes here should rate cuts be issued when the Fed meets again in June).
Geopolitical tensions: The spike in gold prices in recent years has been supported, in part, by geopolitical concerns. When these issues are prevalent, investors typically turn to the safety that precious metals provide, in turn driving up the price of gold and silver. If these concerns remain high in May, and they don't appear set to cool significantly in the final days of April, then gold is positioned to remain high in price and, depending on the severity of these concerns, it could even spike yet again to a new record. So be sure to keep an eye out for any developments that could cause the price to rise or, conversely, temporarily cause the price to fall, thus opening up a new, lower entry price point.
The bottom line
Predicting the future prices of any commodity is inherently risky and difficult to do, particularly for an alternative asset like gold. That said, if current influencing factors like domestic economic concerns, interest rate policy and geopolitical tensions remain where they are toward the end of April, or if any spike in severity, gold's price could soon follow upward. Understanding this potential, it could be smart for prospective investors to get started with the precious metal now, before the next surge in price puts the protection the metal can provide permanently out of reach.
