The first gold rally began in early March, when gold prices spiked to $2,160 an ounce, and that trend is still going strong even now, with gold prices approaching $2,800 an ounce.
But while the gold price trajectory has been beneficial for those who bought in early 2024, it has also left those new to the market wondering whether now is the right time to buy.
Investors should always tailor their investment strategies to their needs. But there are a few reasons why you might want to add gold to your portfolio right now, even at its current highs, according to Angelica Leicht, senior editor of CBC News' "Manage Your Money."
There is still room for further price increases.
Although gold prices have hit record highs and are approaching $2,800, many experts believe there is still room for further price increases. Some analysts predict that gold prices could reach $3,000 an ounce by the end of the year (or shortly thereafter).
There are three factors supporting this outlook, including:
Central Bank Demand: Many central banks around the world have been steadily increasing their gold reserves, which could further push gold prices higher.
Limited Supply: Unlike traditional paper money, which can be printed at will, the global supply of gold is finite. As demand increases, limited supply can push prices even higher.
Expanding industrial uses: Gold’s applications in a variety of industries, including electronics and healthcare, are expanding. As new uses for gold are discovered and implemented, industrial demand could drive prices higher.
So by buying now, investors can benefit from any future price increases.
Measures to prevent economic risks
Inflation may have cooled significantly over the past few months, but the global economy continues to face many challenges, including ongoing geopolitical tensions and economic uncertainty.
But gold has long been seen as a reliable hedge against these types of uncertainties, so buying now makes sense.
Portfolio diversification remains important
Gold's unique relationship with other investments is one of the main reasons investors add this precious metal to their portfolios.
One of the attractions is that gold has historically had a low or negative correlation with stocks and bonds, so when the stock market goes through a downturn, as it has in recent months, gold has often remained stable.
Bottom line
While investing in any asset at record highs may seem risky, there are strong arguments for adding gold to your portfolio, even at current highs.
The continued potential for price appreciation, the demand for a reliable hedge against economic uncertainty, and the diversification benefits that gold offers all point to the metal's long-term value as an investment.
