Is It a Good Time to Buy Gold? (2024)

Personal Finance Gold

Updated Jul 12, 2024

7-min read

Expert Approved

Expert Approved

This article has been reviewed by a
Certified Financial Planner™ for accuracy.

Written byMaryalene LaPonsie

Written byMaryalene LaPonsie

Expertise:Personal finance, investing, insurance, student financial aid

Maryalene LaPonsie has been writing professionally for nearly 25 years, including 15 years specializing in education, healthcare, and personal finance topics. She is a graduate of Western Michigan University, where she studied political science and international business. She resides in West Michigan.

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Reviewed byAndrew Steger, CFP®

Reviewed byAndrew Steger, CFP®

Expertise:Holistic financial planning, nonprofit endowments, tax planning, investment management, retirement planning, trust administration, estate planning, budgeting, cash flow analysis, business succession

Andrew Steger, CFP®, provides financial planning and consulting services, assisting families, executives, and business owners with planning and executing successful futures.

Learn more about Andrew Steger, CFP®

Should I buy gold? This is a common question among savvy investors. Gold helps diversify a portfolio and serves as a hedge against inflation. However, buying gold differs from purchasing paper assets like stocks or bonds.

Many wonder whether timing matters when buying gold. Should you buy now or wait for specific prices or economic conditions? The answer isn’t always clear-cut. Keep reading to learn more about deciding when to purchase gold and how to do it.

Should I buy gold now?

Gold prices reached a record high in late 2023, and although they dipped afterward, they have begun to climb again. While it might seem risky to buy gold when prices are high, waiting for a significant drop could be a missed opportunity. The price of gold is influenced by factors such as supply and demand, inflation, interest rates, and the strength of the dollar, as well as international conflicts and political events.

Economic and global conditions are always in flux, making it challenging to predict future gold prices with certainty. Therefore, it’s important to consider the current economic indicators and global events while understanding that these factors can change rapidly.

Here’s what you should consider.

Seasonal gold prices

Historically, gold prices have followed a seasonal pattern. According to Physical Gold Ltd., a London-based bullion dealer, the best times to buy gold tend to be at the start of the calendar year and midsummer.

Research also highlights an “autumnal effect” identified in a 2013 study. This study showed that between 1980 and 2010, gold prices saw a statistically significant increase in September and November. This pattern suggests that waiting until these months to buy could result in higher costs.

Inflation and interest rates

High interest rates generally correlate with a stronger dollar and lower gold prices, and falling interest rates can lead to higher gold prices. As interest rates fluctuate, so does the price of gold.

However, inflation rates also play a crucial role. Gold prices typically perform well during high inflation periods. If inflation decreases, demand for gold may decline, potentially balancing out any price increase due to falling interest rates.

Current economic and political conditions

Gold prices often move inversely to the stock market. When the stock market rises, gold prices tend to fall, and vice versa. However, both can rally under certain conditions.

International conflicts and political uncertainties also drive up gold prices as investors seek safe havens. For instance, the Israeli conflict with Hamas contributed to the record gold prices seen at the end of 2023.

Buy gold before prices rise

While market indicators are mixed, it may be advantageous to consider buying gold now. Historical trends and expert analyses suggest that waiting could lead to higher prices.

Seasonal dips typically occur in summer, but gold could still be more expensive than earlier in the year. Events such as the U.S. presidential elections may introduce further uncertainty, potentially driving up gold prices.

Is this a good time to buy gold? How to know

When deciding whether to buy gold, consider the following:

• Inflation: Is it rising or declining?
• Interest rates: Are they expected to increase or decline?
• Stock market: Are we in a bear or bull market?
• Politics: Is there unrest in the world or uncertainty closer to home?

There is no crystal ball to predict gold price changes, but historically, prices tend to be lower—and thus a good time to buy—during periods of high interest rates, high inflation, a strong stock market, and global or domestic stability. Demand for gold often drops in these conditions.

Instead of trying to time your gold purchase perfectly, consider using a strategy known as dollar-cost averaging. This involves making regular, consistent purchases throughout the year, which can help mitigate the risk of buying at a peak price.

For example:

• Plan to buy $12,000 worth of gold over the year.
• Instead of buying all at once, purchase $1,000 worth of gold each month.
• This approach allows you to buy gold at various price points, averaging out the cost over time.

One caution: Some dealers offer discounts for larger purchases, which might negate the benefits of dollar-cost averaging. If such discounts are available, buying a larger amount at one time could be more advantageous.

Resources for gold price research

Before buying gold, it’s wise to research historical prices and future forecasts for the commodity. Here are places to check for information:

• World Gold Council: Dubbed the “global experts on gold,” the World Gold Council researches the international gold market and offers information to professional and individual investors.
• S&P Global Market Intelligence: The analysts at S&P Global Market Intelligence have put together a commodity briefing report for gold. It’s available for download to anyone with a business or institutional email address.
• J.P. Morgan Global Research: Financial firm J.P. Morgan conducts analysis on various markets and investments, including gold, and many of its findings are available to the public.

Risks of buying gold

No investment is risk-free, including gold. Before purchasing precious metals, it’s important to understand how gold pricing works and the associated costs.

• Volatility: The price of gold can be volatile, with significant upward and downward swings influenced by various factors. While its value generally recovers after a drop, these fluctuations can be challenging for some investors..
• Lack of yield: Physical gold investments do not generate dividends or interest.
• Storage costs and risk: Physical gold comes with additional costs not associated with paper investments. If held in an IRA, you must pay for storage in an IRS-approved depository. If stored at home, you’ll need to invest in a safe and ensure adequate insurance coverage. You also risk theft if you keep gold in your house.

Many investors choose gold because it is a tangible asset expected to hold its value regardless of inflation or currency fluctuations. However, it typically doesn’t appreciate in the same way as stocks. Gold can be a valuable part of a diversified portfolio, but it should complement other investments rather than replace them.

How to invest in gold

Many people assume that purchasing physical gold is the only way to invest in gold, but you have several options, each with its own pros and cons.

Physical gold

• Gold bullion can be purchased as coins, rounds, or bars, typically 99.5% pure.
• Physical gold offers the security of a tangible asset but comes with storage costs and risks.
• Ensure secure storage, either in a safe at home with adequate insurance or in a professional depository.

Gold ETFs

• A gold exchange-traded fund (ETF) allows investors to own shares in a company that owns physical gold.
• This eliminates the storage and theft risks associated with physical gold.
• You can buy ETFs through brokerage firms just as you can buy stocks and mutual funds.
• However, investors do not own the gold directly and face risks if the ETF company defaults.

Gold mining stocks and ETFs

• Investing in stocks or ETFs of gold mining companies involves buying shares in gold mining and exploration companies.
• These investments aren’t directly tied to the price of gold but can benefit from increased demand for gold.
• They don’t involve storage fees or theft risks.
• The value depends on the performance of the companies rather than the gold price itself.

Each investment option has its own advantages and disadvantages. Your choice will depend on your preferences, risk tolerance, and financial goals. Sometimes, combining these options may be the best strategy. Consult with a financial professional familiar with gold investments for personalized advice.