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Gold Prices Are Near Record-highs: 4 Reasons To Invest Now

Gold prices have been climbing — but there are a few reasons it still makes sense to buy in right now. CATHERINE LANE / Getty Images

Gold has been an alluring option for investors for hundreds of years and interest in the precious metal has continued to grow over time. For example, last year, gold investing hit an 11-year high as more and more investors flocked to the precious metal to take advantage of the unique benefits it offers. 

Given today's economic challenges, that recent growth makes sense. After all, gold helps to counteract the risk of losses to your portfolio from more volatile investments, like stocks. And, it can also help to protect your wealth when inflation impacts the value of traditional currencies.

Gold prices have been hovering near record highs this week, so we may see another uptick in interest soon. As of March 5, the spot price of gold hovered just above $2,100 per ounce — up from about $1,900 per ounce in mid-February. But while this new uptick in gold's spot price may drum up more interest from investors, is it really a good idea to buy gold right now? 

Explore your gold investing options online now.

Gold prices are near record-highs: 4 reasons to invest now

As gold prices hover near new highs, there are a few smart reasons you may want to consider investing in this precious metal. Here are four reasons to buy in now: 

Gold can act as a shelter during economic uncertainty

During times of economic uncertainty, many investors will turn to gold as a safe-haven asset for refuge from the volatility of traditional financial markets. That's because gold's value is not directly tied to economic indicators or government policies, which makes it a relatively stable store of wealth. 

During economic downturns or periods of currency devaluation, the demand for gold tends to rise, as it does not typically experience the same fluctuations as paper currency does. In turn, gold tends to have an enduring appeal as a shelter during turbulent economic times, making it a valuable part of any investment strategy.

Find out how gold investing can benefit your portfolio today.

Gold can be used to diversify your portfolio

Successful investors tend to understand the importance of using diversification to mitigate risk. Gold, with its low correlation to traditional assets like stocks and bonds, coupled with its historical ability to act as a hedge in times of economic uncertainty, offers an effective means of diversifying your investment portfolio. 

While gold prices can experience short-term fluctuations, the value tends to grow steadily over time. So, if you wait for prices to drop, you could actually end up paying more to buy in and enhance the stability and longevity of your portfolio.

Gold helps to preserve wealth during inflationary periods

Today's inflation rate is a lot lower than it was at its peak in 2022. That said, we're not in the clear just yet. Right now, the inflation rate is 3.1% — higher than the Fed's goal of 2% — and, in turn, the need for an effective inflation hedge is paramount. That's where gold comes in.

In an economic environment where the purchasing power of traditional currencies may erode, gold can help to protect your wealth. So by investing in gold now, you're making a strategic move to safeguard your assets against the erosive effects of inflation while working toward long-term wealth preservation.

The uses for gold are growing

Gold is also being used in other ways outside of its historical role as an investment — adding to the value that this precious metal offers. For example, with more and more advancements being made in technology, gold's applications grow, stretching across electronics, healthcare and other cutting-edge technologies. 

This not only bolsters the industrial demand for gold but also underscores its relevance in the modern economy. By investing in gold, you can position yourself at the intersection of tradition and innovation, benefiting from gold's historical stability while taking advantage of the precious metal's role in technological advancements.

The bottom line

Gold prices are elevated right now, but that doesn't mean you should wait to buy in. If you've been considering a gold investment, it makes sense to add some of the precious metal to your portfolio now. After all, gold offers a number of unique benefits to investors, many of which are incredibly relevant in today's economic environment. 

Angelica Leicht

Angelica Leicht is senior editor for CBS' Moneywatch: Managing Your Money, where she writes and edits articles on a range of personal finance topics. Angelica previously held editing roles at The Simple Dollar, Interest, HousingWire and other financial publications.

Best Gold Stocks Right Now

If you plan to diversify your portfolio in light of recent events, investing in gold stocks could be a good choice. Gold stocks not only track the movements of gold prices that tend to rise in uncertain times, but they also generally gain value in a rising stock market. 

Gold stocks could serve as a hedge to stocks you hold from other economic sectors. Gold stocks can also be traded speculatively in the current economic environment. 

Keep in mind that gold stocks can vary considerably in price and investment quality, ranging from highly-rated stocks to pink-sheet penny stocks. The best gold stocks for your portfolio will depend on your risk tolerance and financial objectives.   

Quick Look at the Best Gold Stocks: Overview

Newmont Corporation (NYSE: NEM) is the world's largest gold mining stock. The Greenwood Village, Colorado-based company was incorporated in 1921 after being founded in 1916 by William Boyce Thompson. The company employs 24,000 people worldwide. 

Barrick Gold Corp. (NYSE: GOLD) is one of the largest gold mining companies in the world and is based in Toronto, Ontario, Canada. The company was founded by Peter Munk and was listed as a publicly-traded company on the Toronto Stock Exchange in 1983. 

Kirkland Lake Gold (NYSE: KL) is based in Toronto and was founded by Brian Hinchcliffe and Harry Dobson in 1994. The company began operations as Brimstone Gold Corporation, growing through key acquisitions such as Foxpoint Resources in Vancouver and Kirkland Lake in Ontario. 

Best Online Brokers for Gold Stocks

You can buy gold stock through virtually any broker with access to major stock exchanges. Commission-free trading is also offered at many online stock brokerages. Some of the top U.S. Brokers that you might consider when trading include: E*TRADE, T.D. Ameritrade, Charles Schwab or Interactive Brokers.  

Features to Look for in a Gold Stock

A strong balance sheet: As with stocks in general, a strong balance sheet with consistent earnings per share growth would qualify a stock for consideration. The balance sheet will also indicate the amount of cash on hand and the amount of debt outstanding. A miner needs cash flow to find more gold and to maintain the gold it holds in reserves, while more cash also generally indicates lower debt. 

Location of mining operations: Most investment-grade mining companies operate multiple mines in their base country, as well as in other countries where the company owns an interest in mines and mining operations. Mines operated abroad could be at risk for a number of reasons, including geopolitical concerns, although most mining companies work with the governing bodies of the countries where their mines are located. Ideally, mines located abroad should be in politically stable countries in order to mitigate geopolitical risks.  

Solid operating margins: In the gold mining business, the better the margins, the higher the cash flow. The margins for gold miners tend to improve as the gold price trends higher, thereby fueling further upside in the price of gold stocks. 

Is Now the Time to Buy?

The gold mining sector has been one of the few segments of the overall economy that managed to gain value during the COVID-19 world health crisis. The gains in gold stocks can be attributed to the surge in the price of gold, with many companies adjusting to temporary mine closings all over the world. Remember, though, that certain stocks could suffer for reasons not related to the industry. Plus, the gold industry is not perfect, and it could run into slumps from time to time.

Buying gold stock with gold at current levels makes sense if the price of gold holds strong and may present additional opportunities if the price of gold sells off. 

If you are looking for stocks by price, be sure to take a look at our other pages covering stocks by price.

If you are looking buy gold stocks check out the Benzinga online broker rankings.

Or, check out some of our other favorites:

Read also: BEST GOLD PENNY STOCKS

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Typically, gold holds its value, so gold stocks are considered a good investment.

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Gold is easy to invest in, so yes, investing in gold is a great investment for beginners.

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Investing in gold is always a good investment if you are looking to balance your portfolio.

Gold Price Maintains Its Bid Tone Near Record High, Overbought RSI Warrants Caution For Bulls

Gold price rallies to a record peak on Thursday amid bets for a June Fed rate cut.

The USD languishes near a month low and further lends support to the XAU/USD.

A softer risk tone also benefits the safe-haven commodity, despite overbought RSI.

Gold price (XAU/USD) gains strong positive traction for the seventh straight day on Thursday and sticks to its intraday gains, near the record high during the early European session. Growing acceptance that the Federal Reserve (Fed) will start cutting interest rates in June keeps the US Dollar (USD) bulls on the defensive and turns out to be a key factor driving flows towards the non-yielding yellow metal. Apart from this, a generally softer tone, persistent geopolitical tensions and China's economic woes lend additional support to the safe-haven commodity.

Meanwhile, Minneapolis Fed President Neel Kashkari downplayed speculations about more aggressive policy easing. This, in turn, triggers a modest bounce in the US Treasury bond yields, which helps limit the downside for the Greenback. Apart from this, extremely overstretched conditions on the daily chart might further hold back traders from placing fresh bullish bets around the Gold price. Investors now look to Powell's second day of testimony, along with the US Weekly Initial Jobless Claims, for some impetus ahead of the NFP report on Friday. 

Daily Digest Market Movers: Gold price is underpinned by Fed rate cut bets  and a softer risk tone

Bets that the Federal Reserve will start cutting interest rates in June, along with geopolitical risks and China's economic woes, lifted the non-yielding Gold price to a record high on Wednesday.

Fed Chair Jerome Powell told US lawmakers on Wednesday that if the economy evolves broadly as expected, the central bank can be expected to cut its benchmark interest rates later this year.

The current market pricing indicates a greater chance, around 70% for a June Fed rate cut, which dragged the yield on the 10-year US government bond to a one-month low on Wednesday.

Minneapolis Fed President Neel Kashkari said that he had penciled in two rate cuts in 2024 and added that he may reduce the number of cuts amid the incoming stronger macro data.

The uncertainty about the Fed's rate-cut path, meanwhile, keeps the US Dollar close to its lowest level since early February and should continue to act as a tailwind for the precious metal.

Three crew members were killed in a Houthi missile strike on a cargo ship off southern Yemen, marking the first fatalities since the Iran-backed group's attacks on vessels in the Red Sea.

This raises the risk of a further escalation of military actions in the Middle East and supports prospects for an extension of the well-established short-term uptrend for the safe-haven commodity.

Traders now look to the release of the US Weekly Initial Jobless Claims data and Fed Chair Jerome Powell's second day of testimony for some impetus ahead of the US NFP report on Friday.

Technical Analysis: Gold price might consolidate its recent strong gains before the next leg up

From a technical perspective, the recent breakout through the $2,064-2,062 strong horizontal barrier and a subsequent strength beyond the $2,100 mark was seen as a key trigger for bullish traders. That said, the Relative Strength Index (RSI) on the daily chart is already flashing extremely overbought conditions. This makes it prudent to wait for some near-term consolidation or a modest pullback before positioning for an extension of the well-established short-term uptrend. Nevertheless, the Gold price seems poised to climb further towards the $2,200 psychological mark.

On the flip side, corrective declines might now be seen as a buying opportunity and remain limited near the $2,100 round figure. The said handle should act as a pivotal point, which if broken decisively could drag the Gold price back towards the $2,064-2,062 resistance-turned-support. Some follow-through selling will suggest that the XAU/USD has formed a near-term top and possibly shift the bias in favour of bearish traders.

Gold FAQs

Gold has played a key role in human's history as it has been widely used as a store of value and medium of exchange. Currently, apart from its shine and usage for jewelry, the precious metal is widely seen as a safe-haven asset, meaning that it is considered a good investment during turbulent times. Gold is also widely seen as a hedge against inflation and against depreciating currencies as it doesn't rely on any specific issuer or government.

Central banks are the biggest Gold holders. In their aim to support their currencies in turbulent times, central banks tend to diversify their reserves and buy Gold to improve the perceived strength of the economy and the currency. High Gold reserves can be a source of trust for a country's solvency. Central banks added 1,136 tonnes of Gold worth around $70 billion to their reserves in 2022, according to data from the World Gold Council. This is the highest yearly purchase since records began. Central banks from emerging economies such as China, India and Turkey are quickly increasing their Gold reserves.

Gold has an inverse correlation with the US Dollar and US Treasuries, which are both major reserve and safe-haven assets. When the Dollar depreciates, Gold tends to rise, enabling investors and central banks to diversify their assets in turbulent times. Gold is also inversely correlated with risk assets. A rally in the stock market tends to weaken Gold price, while sell-offs in riskier markets tend to favor the precious metal.

The price can move due to a wide range of factors. Geopolitical instability or fears of a deep recession can quickly make Gold price escalate due to its safe-haven status. As a yield-less asset, Gold tends to rise with lower interest rates, while higher cost of money usually weighs down on the yellow metal. Still, most moves depend on how the US Dollar (USD) behaves as the asset is priced in dollars (XAU/USD). A strong Dollar tends to keep the price of Gold controlled, whereas a weaker Dollar is likely to push Gold prices up.

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