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Gold Hits Record Highs: Is It Too Late To Invest?

Published 03/05/2024, 10:22 PM
Updated 03/05/2024, 10:22 PM
© Reuters

Investing.com -- The recent surge in the price of gold has captured the attention of investors. As gold closed at record-breaking highs, many are wondering whether it's still a prudent time to invest in the precious metal.

Gold Price Today

The spot gold price closed Monday’s session at $2,114 per ounce after touching a high of $2,119. However, that rally has continued so far on Tuesday, with the spot price of the yellow metal currently at $2,127 per ounce, not far off its record high set in December last year.

With investors continuing to bet on the Federal Reserve cutting rates in June, the rally could see gold make a new all-time high soon.

Gold Price Forecast 2024

When it comes to where the price of gold could head next, HSBC analysts said in a note this week that the gold rally resumed “despite higher yields.”

While they believe the yellow metal is “likely to reach new record highs,” they also state it “may be overstretched.” Gold has an ”undercurrent of support from geopolitics and financial market uncertainty,” added HSBC. They also believe physical demand is likely to recede.

Elsewhere, Citi analysts said they are medium-term bullion bulls and assign a 25% probability that the yellow metal will average a record $2,300 per ounce in the second half of 2024. ”In a low probability wildcard scenario, nominal gold trading could reach $3,000/oz in the next 12-16m,” they declared.

“As listed gold trading flows have shifted from Comex and ETFs to OTC markets and net long positioning remains soft, there is plenty of scope for a medium-term rally after prices consolidate,” added the bank, “Clearly, if the recent topside move sustains for some time, there will be bullish risk to our base case record gold price outlook for cal’24.”

Analysts at GoldPriceForecast are more cautious, noting that during election years, the gold average annual return is mixed.

UBS analysts provided their outlook for gold in 2024 in a recent note, stating that demand for the yellow metal remains solid despite rates repricing.

The bank retained its gold forecasts for the end of June at $2,050 per ounce, the end of 2024 at $2,250 per ounce, and introduced a $2,250 per ounce target for the end of March 2025.

"We maintain gold is an attractive standalone investment and can be used as a portfolio hedge against risk events," said UBS.

How To Invest in Gold

Investing in gold can be approached through various means, each with its own unique characteristics and considerations.

Gold ETFs (Exchange-Traded Funds): Gold ETFs offer an easy way to invest in gold price movements without physically owning gold or trading gold futures. These funds are traded on stock exchanges, and their value is linked to the price of gold. Investing in gold ETFs provides liquidity and eliminates the need for storing physical gold.

Physical Gold: Acquiring physical gold in the form of coins, bars, or bullion offers investors the advantage of owning a tangible asset. However, it involves considerations such as storage, insurance, and security.

Gold Futures: To participate in the gold market, investors can trade futures contracts. These contracts require the buyer to purchase a specific amount of gold at a predetermined price on a future date. However, it is important to remember that futures trading requires knowledge of the market and is generally more suitable for experienced investors.

Gold Mining Stocks: Another way to invest in gold is via investing in gold mining companies. Buying the shares of gold mining companies means that through ownership of companies involved in gold exploration, extraction, and production, you will gain exposure to the gold market. However, be aware that the performance of these stocks is impacted by factors beyond just the price of gold.

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