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Gold has been used as an investmentand a form of currency for hundreds of years — and it offers a number of other unique benefits, too. So, it’s hardly surprising that many investors choose toadd gold to their investment portfolios.
However, it’s typically best to purchase assets when prices are low and sell them when prices are high. And, it makes sense to understand an asset’s historical performance before adding it to your portfolio.
So, how has gold performed over the last year — and whyshould you buy in now? Let’s find out.
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How the price of gold has changed in the past year
Theprice of goldhas grown from $1,834.39 to $2,019.38 per ounce over the last year, according toAmerican Hartford Gold. That’s a gain of $184.99 per ounce — or an increase in value of about 10.08%.
But as with any investment asset, gold’s value can, and does, fluctuate — and the last year has seen surprising highs and lows. For example, the price of gold was at a low of $1,811.06 per ounce in late February 2023 but climbed to 2,039.97 in early March — and then hit $2,052.04 per ounce on May 3, 2023.
And, gold continued to fluctuate throughout the year, dropping to just above $1,800 per ounce by October 2023. But the value of gold later recovered, hitting a high of $2,079.47 per ounce on December 27, 2023.
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Why you should buy gold now
If you want to add gold to your portfolio, this may be a good time to do so. Here’s why:
Prices are low and could grow ahead
Gold prices reached a one-year high in late December, but the price of the precious metal has fallen by about $60.09 per ounce, or about 2.89%, in the time since. In turn, the price of gold is relatively low at the moment.
However, gold prices will likely tick upward at some point in the near future. So, purchasing the precious metal now may allow you to enjoy gainsin value when the price rebounds.
Inflation is still a cause for concern
The price of gold tends to rise during inflationary periods, like the one we’re experiencing now. And, while inflation has been tempered compared to what it was during the pandemic, the most recent inflation report shows that inflation is still higher than the Fed’s target rate.
And, when inflation is high, investors tend to look to gold as a way to maintain the value of their portfolios. This generally leads to an increase in demand for gold, and, in turn, an uptick in the price of the precious metal.
Gold is a diversification tool
It’s typically wise to diversify your investment portfolio, which involves spreading your investments across various assets to mitigate risks from losses.Gold is a smart way to diversify your investments because it’s not closely correlated with traditional investment assets like stocks and bonds.
When market conditions are uncertain or expected to decline, gold can be used to mitigate the risk of losses from other assets. In other words, when the stock market declines, gold’s price usually climbs — thereby reducing the overall losses in your portfolio caused by underperforming stocks.
The bottom line
The price of gold has grown by more than 10% over the past year and it could increase in the future. So, consider adding the precious metal to your portfolio today to protect it from future market swings and inflationary pressures.
Joshua Rodriguez is a personal finance and investing writer with a passion for his craft. When he’s not working, he enjoys time with his wife, two kids and two dogs.
