Gold futures started this Tuesday at $3,406.50 per ounce, showing a 1% increase from Monday’s closing price of $3,370.60. However, prices have dipped below the $3,400 mark after briefly hitting $3,417.80 earlier in the trading session.
This modest uptick in gold prices coincided with news of heightened tariffs on steel and aluminum imports, alongside rising trade tensions between the US and China. Yet, this news didn’t significantly impact the stock market. The S&P 500 saw a smaller gain of less than 1% on Monday, while the CBOE volatility index initially spiked but eventually decreased throughout the day. This index gauges the anticipated volatility of the S&P 500 over the next 30 days.
On Tuesday, the gold futures opening price marked a 1% rise from Monday’s close, contributing to a 2.2% gain over the week, beating last week’s opening of $3,332.50 from May 27th. Over the past month, the opening price has jumped by about 5.1% from $3,239.90 recorded on May 2nd.
Investing in gold typically involves a four-step process.
- Set your goals.
- Determine your allocation.
- Select the type of gold to invest in.
- Consider your investment timeline.
Today, we’re focusing on allocating the right amount of money. Once you’ve established your investment goals for purchasing gold, assessing how much to buy next becomes clearer.
Allocation refers to how your portfolio is divided among various assets like stocks, bonds, and gold. Given that asset values fluctuate, it’s important to establish target allocations for each type to mitigate long-term risks.
For instance, with stock values remaining high, not adjusting your holdings regularly could lead you to be overexposed in that area.
According to Scott Travers, the author of “The Coin Collector’s Survival Manual,” it’s advisable to maintain between 5% and 15% of your net worth in gold.
It’s also crucial to remember that your target allocation should factor in any gold holdings you already possess. Travers suggests checking your jewelry box; you might find that some pieces have appreciated in value over the past year, making them worth more than you realize.
He cautions against selling jewelry to buy gold coins, as dealer fees can eat into your profits from both transactions.
Regarding gold prices, whether you’re looking at data from last month or last year, the trend indicates a steady increase in value for these precious metals.
Historically, gold has gone through long cycles of growth followed by droughts. The period from 2009 to 2011 saw significant growth, but the price then fell and struggled to reach new highs for nearly a decade.
In years where gold price performance is stagnant, it can adversely affect overall returns on investment. If that presents a concern, perhaps a lower allocation may be suitable for you. Conversely, if you’re okay with a down year in gold, aiming for a higher percentage might yield more benefit during a profitable year.
Recent news has created buzz around precious metals, and many analysts are optimistic about gold’s future. A Goldman Sachs survey from May projected that gold could reach $3,700 per troy ounce by 2025, suggesting a significant yearly increase from an opening price of $2,633 on January 2nd. The surge in demand from central banks, along with uncertainties from US tariff changes, may contribute to this upward trend.
If you’re curious about gold’s historical value, there’s plenty to explore.
