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Inflation cooled again in September, the Bureau of Labor Statistics announced on Thursday. Now at just 2.4%, the rate is closing in on the Federal Reserve’s target 2% goal. That keeps expectations set for two 25-basis interest rate point reductions for when the Fed meets again in November and December. Combined with the half a percentage point cut the Fed issued in September, the federal funds rate could be almost a full point lower by the end of the year.
Understanding this potential, then, savers, borrowers and investors may all want to realign their strategies. Investors, especially, may want to reconsider their current assets and look to alternative ones like precious metals. Investing in gold, for example, hit an 11-year high last year when inflation was still elevated and interest rate cuts looked far off. But is it still worth investing in now, ahead of what could be another rate cut at the November Fed meeting? Below, we’ll break down three reasons why gold could still be worth pursuing now.
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Should you invest in gold before the November Fed meeting?
Not sure if now’s the right time to invest in gold? Here are three smart reasons why you should consider doing so before the November Fed meeting.
The price is rising
The price of gold has seen explosive growth so far in 2024, starting the year at $2,063.73 per ounce before surging past $2,600 in September. Currently at $2,672.22 per ounce, gold has grown by nearly 30% this year and many experts predict that it could soon hit the $3,000 mark.
It makes sense, then, to invest before that happens while the price is still manageable. And with the Fed set to take actions that could reverberate throughout the wider economy, now may be a good time to do so.
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It still makes sense to diversify
It will take time for the September rate cut and the presumed November one to reverberate. When those repercussions are felt, then, you’ll be happy you had a diversified portfolio to offset any unforeseen negative effects. Gold can help diversify as it often maintains and rises in value during volatile economic periods. Just be sure to invest in a measured way as most experts recommend limiting gold to 10% or less of your overall portfolio.
Inflation is cyclical
Sure, this current inflation cycle looks to be coming to a close. But inflation is cyclical and it will return at some point, perhaps sooner than anticipated. As the Fed works to establish a new norm, then, it makes sense to buy into gold now to preemptively build in that protection. Gold is considered a traditional hedge against inflation, no matter when that inflation comes.
Add it now, then, so you’re ready for when that happens. If you wait for additional inflation news and further Fed activity, the subsequent price could become out of reach.
The bottom line
For those trying to time a gold investment, it’s critical to remember that gold is a long-term investment with long-term implications. Investing now, then, before another Federal Reserve meeting that could cause the economy to readjust, could be beneficial for many investors. This will allow them to take advantage of a rising price while still diversifying their portfolio and adding an inflation hedge for the future. And if investors change their minds soon, they’ll likely be able to sell their gold investment for a quick profit.
Have more questions? Learn more about investing in gold online today.
