Amid steady inflation and economic instability, some Americans are reassessing their investments. Certainly, recent stock market volatility and turmoil in world events are impacting Americans in numerous ways, from dwindling retirement accounts to shrinking disposable income.
As a result of this economic environment, many investors are considering adding some gold to their portfolios. The yellow metal is often seen as a safe haven for capital and investments in times of economic crisis.
While no one can predict what the future holds for the price of gold, it’s essential to understand where gold might be headed in 2023 before you invest in this precious metal. Start by requesting a free information kit to learn more about this unique investment opportunity.
What is gold worth now?
Before we look at the future outlook for gold, it’s important to review its recent performance. After underperforming for much of 2022, gold rallied late in the year and through the first month of 2023. More specifically, the price of gold increased by 14% from November 2022 through February 8, 2023.
The price uptick may be attributed to less aggressive messaging from the Federal Reserve regarding interest rates. The price may have been further assisted by the reopening of China’s economy and the resulting rise in jewelry demand.
At the time of this writing, in mid-February 2023, the price of gold is $2,646.50 per ounce, up 0.90% for the year to date. If the dollar continues to weaken in value as it did to the tune of 7% from November 2022 to January 2023, it may indicate higher values for gold in the future.
Where gold’s current value ranks historically
Gold’s value dropped 2.88% year-over-year from mid-February 2022. While the drop is relatively minimal, there’s more than meets the eye.
Remember, gold prices approached record levels of over $2,000 per ounce in February 2022 at the onset of the Russia-Ukraine conflict. However, the next several months were not so bullish, as the precious metal fell over 20% in value by September 2022. A historically aggressive interest rate hike schedule, along with a strong dollar, influenced the decline in the precious metal’s value.
“When you have a situation where you have interest rates that went up, and the dollar strengthened, that’s where gold can actually get hurt,” says Philip Palumbo, CEO and chief investment officer of Palumbo Wealth Management. “Gold really didn’t perform as well, and that was really a function of the dollar. So if the dollar really appreciates during an inflationary period, gold will not perform well, but historically gold really has been a good hedge during inflationary periods.”
Gold is often seen as a hedge against inflation and a storage of value. But despite high inflation, the dollar strengthened in relation to other currencies for a large portion of 2022. According to Nominal Broad U.S. Dollar Index data, this trend continued until November 2022, after which the dollar weakened marginally through January 2023. Consequently, this period is when gold prices began to rally upward.
If you think you could benefit from investing in gold now before prices rise then request a free information kit from Goldco to learn how you can get started.
Where gold’s value may go in 2023
No one knows for certain where gold’s value may wind up this year, but many financial experts are bullish on the commodity’s outlook. As Palumbo points out, interest rates and the dollar’s strength will play a prominent role in the prospect for gold this year.
“The trend for gold is definitely going to be upward, which is really going to be dependant on how the dollar performs,” says Palumbo. “I think the dollar continues to weaken in 2023 on the back of maybe the economy actually strengthening a bit and interest rates stabilizing, so in that type of situation, gold could actually do well.”
Furthermore, the threat of a recession may bode well for the price of gold. Historically, gold’s value tends to rise when inflation decreases the value of the currency, though this isn’t always the case.
Whether gold’s value soars in 2023, as some analysts predict, remains to be seen. However, gold’s long-term stability is its greatest value to investors, particularly in a volatile economic environment.
The bottom line
Holding a slice of gold can help to diversify your portfolio and offset riskier investments. Many financial experts recommend holding no more than 5% or 10% of your portfolio in gold.
“We allocate 7.5% in gold,” says Palumbo. “It balances (your portfolio) properly, especially when you have a down-moving stock, you’re happy you have that gold position.”
As with any investment, always research or consult your financial advisor before investing in an asset. You can learn more by requesting a free information kit now or use the table below to explore your gold investing options.
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