As of 9 a.m. Eastern time today, gold was trading at $2,637.93 per ounce, reflecting a -1.07% decline from yesterday’s price of $2,666.03. However, compared to a year ago, the price has surged by over 30%, having been $1,827.79. In the last month alone, gold has risen by 4.44% from $2,520.90.
Gold is a popular choice for investors seeking protection against inflation. As inflation erodes the purchasing power of currencies like the U.S. dollar, gold generally retains or even increases in value over time. Investing in gold, such as through a gold IRA, can help preserve portfolio value, build assets, and offer a hedge against market volatility.
According to Dennis Shirshikov, a finance professor at City University of New York, “Gold has intrinsic value and tends to retain its worth over time, making it a stable store of value during economic uncertainties.” Additionally, gold is highly liquid, meaning it can be easily bought and sold in the market, enhancing its appeal as an investment.
Historical Price Performance of Gold
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Gold has long been favored for inflation protection. When inflation causes the purchasing power of the U.S. dollar to decline, gold typically appreciates in value. This makes it a reliable asset for safeguarding portfolios from inflation and market instability.
Over the long term, gold has offered lower average annual returns compared to stocks. Between 1971 and 2024, stocks delivered average annual returns of 10.7%, while gold returned 7.9% over the same period.
Understanding Spot Gold Prices
The spot price of gold represents the current rate at which the metal can be bought or sold in real-time transactions. Monitoring this spot price helps investors gauge market trends and the demand for gold. When the spot price rises, demand is increasing, and vice versa.
Spot prices differ from futures contracts, which are agreements to buy or sell gold at a future date. The spot price can either be higher or lower than the futures price.
When it’s lower, the market is in “contango,” a scenario often seen with commodities that have high storage costs. When the spot price exceeds the futures price, it’s known as “backwardation,” and analysts believe that market prices will eventually converge with futures prices.
What is a Price Spread in Gold Trading?
In gold trading, the price spread is the difference between the buy (ask) and sell (bid) prices of the asset. The ask price is what investors pay to purchase gold, while the bid price is what they receive when selling. A smaller spread indicates a more liquid market, signaling strong demand for gold.
How to Invest in a Gold IRA
A Gold IRA is a self-directed individual retirement account that allows investors to hold gold as part of their retirement portfolio. These accounts are governed by the same rules as traditional IRAs, including contribution limits, tax advantages, and required minimum distributions. However, the gold held in these accounts must meet strict standards, with only coins or bars of 99.5% purity or higher being eligible.
Other Ways to Invest in Gold
James Taska, a fee-based financial advisor, explains that gold can be purchased either as a physical asset or as a securitized product. Physical options include gold bars, coins, and jewelry. Bars, known as bullion, are stamped with purity and weight, while collectible coins like the American Gold Eagle often carry a premium.
Jewelry, while an investment, also factors in craftsmanship, meaning its price can significantly exceed the value of the gold alone. Investors may also choose gold futures contracts or funds like ETFs and mutual funds, which allow them to speculate on gold’s price without handling the physical asset.
Is Now a Good Time to Invest in Gold?
According to Taska, the decision to allocate funds to gold should be made on a case-by-case basis. However, diversifying with gold can lower overall risk and volatility in a portfolio, says Shirshikov.
With inflation driving investors toward more stable assets, gold has reached record-high prices. J.P. Morgan projects that gold will average $2,500 per ounce by the end of 2024. Many experts agree that now is a favorable time to consider gold as part of a diversified portfolio.
Current Precious Metals Prices
As of 9 a.m. ET, the following precious metals were trading at these prices:
- Gold: $2,637.93 per ounce
- Silver: $31.31 per ounce
- Platinum: $980.38 per ounce
- Palladium: $1,000.30 per ounce
Silver is more volatile than gold and reacts strongly to economic shifts due to its widespread industrial use. Platinum and palladium also serve industrial purposes and can experience significant price fluctuations, offering opportunities for speculative profits.
The Bottom Line
As inflation continues to affect the U.S. economy, many investors are turning to gold as a hedge. Whether through a Gold IRA, physical ownership, or funds, gold offers flexibility and security in both short- and long-term investment strategies.
Frequently Asked Questions:
- What is the best way to own gold?
Many investors prefer ETFs for their ease of management and liquidity. - Is gold a good investment?
Gold is a solid choice for diversifying portfolios and protecting against inflation. - Should I buy gold coins or bars?
Coins may have added value as collectibles, while bars are typically valued based on weight and purity alone.
Source; Newsbreak