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Gold prices are falling. Here’s why you should still invest.

Whatever the economic environment, gold can help you diversify against volatility in other markets.

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Following a Strong upward trajectory Over the past few weeks, gold prices this week have returned to where they were two months ago.

can be a A few contributing factors As for the drop, gold prices rose as demand picked up in the past few weeks amid concerns over the US His loan is in default. Although the debt limit has not yet been raised, lawmakers in Washington report discussions has been positiveThat could dampen some recent surges.

Another possible reason could be uncertainty about the Federal Reserve’s next rate move. When can fade Ready to take a break Rate, new data from US Bureau of Economic Analysis showed that prices rose 4.4% year-on-year in April – leading forecasters such as CME Group FedWatch tool To raise the possibility of another rate hike in June.

Despite these short-term factors, though, gold can still be a good investment choice Investors focus on the long term. In fact, these fluctuations are likely to be a temporary decline compared to a larger rise in gold For the month to come.

Now thinking about investing in gold? Learn how precious metals can benefit your portfolio with a free information kit.

Why now is still a good time to invest in gold

Overall, gold is still 5% higher than this time last year. Despite today’s slight departure, here are a few reasons Gold still has value.

It is a hedge against the US dollar

Inflation can happen It’s getting coldBut the value of the US dollar is still very low Recent highs last fall. Since it moves against the value of the dollar, gold can still be a good bet to protect your money if the dollar is weak.

“The U.S. dollar is expected to weaken in the coming years,” said Shawn Ballinger of Columbus Street Financial Planning. JP Morgan Research Analysts took a “neutral stance” on it earlier this year.

If this is true, then buying gold can help investors maintain value during periods of decline. “These factors, along with technical price breakouts, could prove as good for gold as in 2002 to 2012,” Bollinger said. During that time, the spot price of gold rose from about $300 to about $1,700 an ounce. World Gold Council. “No two economic cycles are identical, but 2023 looks economically similar to the 2001 to 2002 period.”

Thinking of investing in gold? Find the best options for your portfolio now with a free Investor Kit

This can help against the coming recession

Amid debt ceiling talks and shifting opinions about impending interest rate hikes, concerns remain among experts and Americans Chances of recession.

inside Minutes published last week From the Fed’s meeting earlier this month, Fed staff echoed their March prediction that a recession is likely this year.

“Economic forecasts prepared by staff for the May FOMC meeting estimate that the impact of an expected further tightening of bank credit conditions, amid already tight financial conditions, will lead to a mild recession later this year, followed by a moderately. rapid recovery,” the minutes read. .

Your portfolio is diversified A stable asset like gold can be a smart choice before a recession when market conditions look weaker. While there’s no guarantee what a recession might mean for any market, an allocation is A small portion of your portfolio is in goldWhich is often stable or even increases when the stock market goes down, can act as a safe haven.

Bottom line

This week gold prices are falling from recent highs. But that doesn’t mean we’ve reached the end of current pricing. A few different factors could bode well for gold investors in the coming months, including a possible fall in the dollar’s value and the possibility of a recession.

What’s more, gold can be a Smart investment in any economy. Diversifying by adding an alternative asset like gold can be a good way to ensure you can weather volatility and still take advantage of growth-focused markets over the long term.

See how gold can fit your portfolio with a free investment guide today.

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