Gold () futures opened at $5,005.50 per troy ounce on Tuesday, down 1.5% from Monday’s closing price of $5,082.50. Gold reached a new all-time high of $5,097.30 Tuesday morning, before pulling back.
The price of gold is up 16.3% for the year as geopolitical tensions and domestic unrest with ICE dominate headlines. The slight pullback precedes a Fed meeting that’s expected to leave interest rates unchanged. The Fed lowered rates three times last year, for a cumulative rate decline of 75 basis points. After the committee’s December meeting, Fed Chair Jerome Powell expressed support for a “wait and see” approach going forward.
Meanwhile, the U.S. government is facing another shutdown if lawmakers do not pass funding legislation before midnight on Friday. The last shutdown paused the flow of economic data the Fed uses to make decisions. If that happens again, it could complicate the outlook for interest rates and the gold price going forward. Gold does not pay interest, so it tends to perform better when interest rates are lower.
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The opening price of gold futures on Tuesday was 1.5% lower than Monday’s close. Here’s a look at how the opening gold price has changed versus last week, month, and year:
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One week ago: +7.4%
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One month ago: +10.9%
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One year ago: +81.3%
On Jan. 26, gold’s one-year gain was 81.7%.
24/7 gold price tracking: Don’t forget you can monitor the current price of gold on Yahoo Finance 24 hours a day, seven days a week.
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Learn more: Gold vs. crypto: Which should investors own in debasement trade?
Gold has the same high-level risk as any investment: You could lose money. And, as with other investments, a loss on gold can materialize in different ways. Understanding the potential outcomes is the first step to managing your risk when investing in gold.
According to gold experts, would-be gold investors should understand these four risks:
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Price
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Speculation
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Opportunity cost
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Fraud
Today, we’ll focus on the first two: price and speculation.
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There is a price risk for investors who buy gold when the metal is nearing record high prices. “Buying high to hope for short-term higher is a tough strategy,” said Darrell Fletcher, managing director, commodities at Bannockburn Capital Markets.
Despite the high prices, there are positive dynamics in play for the precious metal. Fletcher pointed out that gold is recovering from decades of low prices, and it’s an increasingly popular diversification asset for central banks and individual investors.
The right expectations, a long timeline, and an appropriate allocation can limit your pricing risk. “Gold should not be seen as a driver of supercharged returns — it’s there to act primarily as a stabilizer in a diversified portfolio,” explained Alex Tsepaev, chief strategy officer of B2PRIME Group.
If you are interested in learning more about gold’s historical value, since 2000.
Thomas Winmill, portfolio manager at Midas Funds, encourages investors to view positions in gold bullion, coins, and ETFs as speculative. Gold is a commodity, and “commodity prices are dependent on macroeconomic, political, industrial, and financial factors that are unpredictable, and in some cases, unknowable.”
Despite its recent performance, gold is an unpredictable asset. Keeping that in mind when making trading decisions could protect you from over-exposure and unrealistic expectations.
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Whether you’re tracking the price of gold since last month or last year, the price-of-gold chart below shows the precious metal’s steady upward climb in value.
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