Gold prices are closing in on $2,800. Should you buy in now?

The gold market has experienced significant growth throughout 2024, with prices surging to unprecedented heights and shattering numerous records along the way. Gold’s bull run first started in early March, when the price of gold skyrocketed to $2,160 per ounce — up 8% from the previous price record set in December 2023. The upward trajectory continued from that point, with gold’s price shattering record after record on its climb. That trend is still going strong even now, with gold prices closing in on $2,800 per ounce. 

This meteoric rise has resulted in big returns for the investors who bought in earlier this year. For example, the investors who purchased gold in March when it hit $2,160 per ounce have seen their gold values increase by nearly 27% in the time since. That’s a huge uptick in value in a matter of months, especially on an asset that’s known more for long-term growth.

But while gold’s price trajectory has benefitted those who bought in early in 2024, it has also left newcomers to the market wondering whether now is the right time to buy in. After all, the prospect of buying at historic highs is counterintuitive to the golden rule of investing: Buy low and sell high. So should you invest in gold now, despite its premium price? 

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Should you buy gold now?

You should always tailor your investment strategy to your specific needs. However, there are a few reasons why you may want to add gold to your portfolio now, even at its current high price:

There’s still room for more price growth

While gold prices are already at record highs and are closing in on $2,800 per ounce, many experts believe there’s still room for further price growth. Some analysts believe that gold could reach $3,000 per ounce by year’s end (or shortly after). Several factors support this outlook, including:

• Central bank demand: Many central banks around the world have been steadily increasing their gold reserves. This ongoing demand from institutional buyers could continue to drive prices upward.
• Limited supply: Unlike traditional paper currencies, which can be printed at will, the global gold supply is finite. As demand grows, the limited supply could push prices even higher.
• Expanding industrial use: Gold’s applications in various industries, including electronics and healthcare, are expanding. As new uses for gold are discovered and implemented, industrial demand could further boost prices.

So, by buying in now, investors may be positioning themselves to benefit from any future price increases that occur, even if they seem unlikely given the current high cost. Waiting, though, could mean missing out on buying in at a lower price point.

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You need a hedge against economic uncertainty

Inflation may have cooled significantly over the last few months, but that’s hardly the only economic issue that could impact your investment portfolio. The global economy continues to face numerous challenges, including ongoing geopolitical tensions and economic instabilities. But gold has long been regarded as a reliable hedge against these types of uncertainties, so it makes sense to buy in now. Here’s how it could protect you in an uncertain economic environment:

• By preserving your purchasing power: Gold tends to maintain its value over long periods, often preserving purchasing power even as currencies fluctuate.
• By acting as a safe-haven asset: During periods of severe economic stress or geopolitical turmoil, gold often experiences increased demand from investors seeking safe-haven assets. This makes gold a reliable store of value during turbulent economic times and provides a degree of security that other assets may not.
• By offering high liquidity: Gold is highly liquid and can be easily converted to cash, providing you with financial flexibility during uncertain economic times.

Portfolio diversification still matters

Gold’s unique relationship with other investments is one of the main reasons investors add this precious metal to their portfolios. One of the draws is that gold has historically shown a low or negative correlation with equities and bonds, so when the stock market is experiencing downturns, as it has in recent months, gold often remains stable. 

So by incorporating gold into your portfolio now, even at today’s high prices, you’re adding an asset that doesn’t move in sync with traditional investments. This reduces the overall risk and volatility of your portfolio, ensuring that, even if the other assets you’ve invested in are experiencing losses, a portion of your wealth remains protected. 

The bottom line

Gold’s current price surge has prompted some investors to question whether now is the right time to buy. And while investing in any asset at a record high may seem risky, there are strong arguments for adding gold to your portfolio, even at its current elevated levels. The potential for continued price appreciation, the need for a reliable hedge against ongoing economic uncertainty and the diversification benefits that gold provides all point to the metal’s enduring value as an investment.