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Gold has long been a favored investment, but interest in this precious metal has increased in recent years due to growing economic pressures. With inflation remaining stubbornly high throughout 2022 and 2023, many investors have sought safer assets to protect their wealth, with gold standing out for its ability to protect against inflation. This increased demand was further fueled by concerns over rising interest rates and ongoing geopolitical tensions, which prompted investors to view gold as a valuable commodity. a stable and reliable option.
However, as we move closer to the end of 2024, the economic landscape is transforming. Inflation has finally calmed downoffering some relief to consumers and investors and the Federal Reserve has finally started reduce interest rateswith further rate cuts expected through 2025. This dynamic creates an environment in which many investors are re-evaluating their strategies to ensure their portfolios can withstand the future.
However, amid these changes, the arguments in favor of investing in gold remains convincing. Here we’ll detail some signs that you may want to invest in gold now, despite the changes in the economic landscape.
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4 signs you should invest in gold now
If you’re wondering whether you should invest in gold right now, the following signs could indicate that it’s a good time to act:
Inflation has slowed, but risks remain
After a few years of high inflation, the inflation rate has fallen to a three-year low and is now near the Fed’s 2% target. While this represents a welcome relief for many, it does not mean that inflationary risks have completely disappeared. The economy can and often does change quickly, and there is always a risk that inflation will rise again in the future.
Gold has always been a reliable hedge against inflationretaining its value when the purchasing power of currencies decreases. So even though inflation is currently low, the future remains uncertain. Adding gold to your portfolio could therefore be a way to preserve your wealth if and when inflationary cycles change.
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The Federal Reserve has started lowering interest rates
The Fed made its first rate cut in mid-September and analysts expect these cuts to continue through 2025 – with at least two more 25 basis point cuts expected before the end of the year. ‘year. This is important because lower interest rates reduce the opportunity cost of holding non-yielding assets like gold.
When rates are low, gold’s appeal increases because investors don’t lose out on the higher interest they could earn elsewhere. As rates fall, gold becomes more attractive as a store of valueespecially if the Fed continues on this path for an extended period of time. Lower rates also tend to weaken the dollar, which can cause gold prices to rise further.
Stock market volatility increases
Although the stock market has remained generally strong this year, there have been some cases of stock market volatility recently. This can be scary, given that this type of volatility can cause your portfolio value to drop significantly and this can happen within minutes. If you are wary of the stock market’s penchant for unpredictable fluctuationsgold could be a way to hedge against this volatility.
When stocks experience sharp corrections or swings, gold typically performs well, providing a layer of stability to your portfolio. So, if you’re concerned about the possibility of a larger market downturn or prolonged volatility, adding gold to your investment portfolio now can help. reduce your overall portfolio risk.
Gold prices are higher than ever
Gold prices rose to several historic peaks in recent months, reflecting the growing demand for this asset in an uncertain economic context. Although you might be hesitant to invest when gold prices peak, many experts believe that gold still has room to grow – and could even soon reach $3,000 per ounce.
If prices continue to rise, getting in now could help benefit from greater appreciation. But if you wait, you could be left out if the price of gold continues its impressive rise, as many experts expect, at least in the short term.
The essentials
The current economic environment presents several compelling reasons to invest in gold. While inflation has calmed, Fed rate cuts and increased stock market volatility are creating a landscape in which gold’s safe-haven appeal is particularly strong. And even though gold prices are at record highs, its price is expected to rise over time. So now may be the perfect time to add gold to your investment portfolio, especially if you want to capitalize on future price growth.
