Depending on interest rates, the dollar’s strength, and other circumstances, 2023 could be a banner year for the gold market. Getty Pictures
Several Americans are reevaluating their assets due to persistent inflation and economic turmoil. Recent stock market volatility and global unrest are hitting Americans in a variety of ways, including diminishing retirement accounts and declining discretionary income.
Due to the current economic climate, some investors are considering adding gold to their portfolios. Gold is frequently viewed as a safe haven for wealth and investments during economic downturns.
Before investing in gold in 2023, it is important to understand where its price may be headed. Get a free information packet to learn more about this exceptional investment opportunity.
How much is gold now worth?
Prior to discussing the future forecast for gold, it is essential to examine its current performance. After underperforming for the majority of 2022, gold surged for the remainder of the year and the first month of 2023. In particular, the price of gold rose by 14% between November 2022 and February 8, 2023.
The price increase may be related to the Federal Reserve’s less harsh language regarding interest rates. The price may have benefited from the reopening of China’s economy and the subsequent increase in jewelry demand.
Mid-February 2023, at the time of this writing, the price of gold per ounce is $2,646.50, up 0.90 percent year-to-date. If the dollar continues to decline in value, as it did by 7% from November 2022 to January 2023, this may portend future price increases for gold.
Where the current price of gold ranks historically
From mid-February 2022 to mid-February 2023, gold’s value declined by 2.8% annually. Although the decline is very little, there is more to it than meets the eye.
Remember that gold prices neared record highs of nearly $2,000 per ounce in February 2022 as the Russia-Ukraine conflict began. However, the subsequent months were not as optimistic, as the price of the precious metal declined by nearly 20% by September 2022. A historically aggressive interest rate hiking timetable and a strong currency contributed to the drop in the value of the precious metal.
Philip Palumbo, chief executive officer and chief investment officer of Palumbo Wealth Management, explains, “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,” “The dollar was largely responsible for gold’s lackluster performance. Hence, if the dollar increases much during an inflationary period, gold will perform poorly; nonetheless, historically, gold has been an excellent hedge during inflationary periods.”
Gold is commonly viewed as a hedge against inflation and a value store. Yet, despite significant inflation, the dollar rose against other currencies during the majority of 2022. According to statistics from the Nominal Broad U.S. Dollar Index, this trend lasted until November 2022, following which the dollar had a slight decline until January 2023. Hence, gold prices began to rise during this time frame.
If you believe you could profit from investing in gold prior to a price increase, download a free information kit from Goldco to learn how to get started.
Where gold’s price could be in 2023
No one knows for sure where gold’s price will end up this year, but many financial experts are optimistic about the metal’s future. According to Palumbo, interest rates and the strength of the dollar will play a significant impact in the outlook for gold this year.
Palumbo predicts that the dollar’s performance will have a significant impact on the direction of the gold market. “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.”
In addition, the fear of a recession may speak favorably for the gold price. Traditionally, gold’s value tends to increase when currency values fall due to inflation, however this is not always the case.
If the price of gold skyrockets in 2023, as some analysts forecast, remains to be seen. Yet, gold’s greatest value to investors is its long-term stability, especially in a tumultuous economic environment.
The conclusion
Gold can help you diversify your portfolio and balance out risky investments. Numerous financial experts recommend allocating no more than 5 to 10 percent of your portfolio to gold.
Palumbo states, “We allocate 7.5% in gold,” “It balances (your portfolio) properly, especially when you have a down-moving stock, you’re happy you have that gold position.”
Before investing in any asset, always conduct research or consult your financial counselor. Get a free information kit to learn more, or use the table below to explore your gold investment alternatives.
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