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The remarkable, record-breaking price surge that gold experienced in 2024 continued this week as the price of the precious metal surged to $2,871.74 per ounce. That’s up from the $2,700 mark gold surpassed last October and, overall, is up just under 40% from where it started in January 2024 when the metal was priced at $2,063.73 for the same amount. It’s possible, if not likely, that gold could soon surpass the $3,000 price point, should certain economic conditions become more pronounced.
Against this backdrop, and with inflation rising and interest rate cuts on hold, many investors may be contemplating a potential gold investment. Below, we’ll break down three reasons why it could be worth investing in now before the price rises again.
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Why you should invest in gold before the price rises again
Here are three big reasons why investors, whether they’re beginners or veterans, should consider investing in gold now before the price of the metal rises to yet another new record:
It can hedge against inflation
Gold has multiple advantages for investors, perhaps the most notable being its historic ability to hedge against inflation. Gold can often maintain and even rise in value during inflationary periods and this is demonstrated simply by looking at recent readings. Inflation rose in December to 2.9%, almost a full percentage point above the Federal Reserve’s 2% target goal. And, just weeks later, gold’s price surged. If inflation continues to tick up, then, gold’s price likely will, too. So, protect against the former by investing in the latter now.
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Your portfolio needs diversification
Stock market performance has been uneven in recent weeks, causing many investors to turn to safe haven assets like gold. Gold can provide some much-needed portfolio diversification for those who are otherwise heavily invested in stocks, bonds and real estate. Because of its ability to weather economic volatility, gold in the right amount (capped at 10% of your portfolio) can be valuable. But it should be seriously considered now, at the start of February. If domestic economic policies or geopolitical tensions rise in the short term, the price of the metal could become out of reach for many. So don’t wait for that potential scenario to become a reality.
The price could rise sooner than anticipated
The price of gold hit a record in October but then fell at the start of November. Now, barely three months later, the price of gold is up again at a new record high. Waiting for a drop in the price could be a mistake, as there’s no guarantee that the precious metal will become even cheaper and it could rise even further if the inflation reading released next week, for example, shows a troubling trend.
Since gold is driven by factors like inflation, interest rates, domestic economic policies, geopolitical tensions, and more, any combination of these could impact the price and cause it to rise sooner than first anticipated. Waiting to act, then, would both delay securing the protection gold offers now and potentially force investors to buy in at a higher price than they would have paid if they acted more aggressively.
The bottom line
Minus some small drops, the price of gold has steadily increased for much of the last year. With all of the factors that historically drive the price of gold prevalent now, there’s a high likelihood that the price of the metal will continue its upward movement in 2025. Because of this potential and due to the inflation hedge and portfolio diversification gold offers, many prospective investors should utilize this moment to explore their options and promptly invest, while they still have an affordable entry point available.
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