Gold () futures opened at a record $4,130.90 per ounce on Tuesday, up 0.5% from Monday’s close of $4,108.60. The price of gold also rose in early trading to a record $4,190.90.
The trade conflict between the U.S. and China ramped up Tuesday when Beijing prohibited business dealings with five U.S. subsidiaries of Hanwha Ocean, a South Korean shipmaker. While the move follows President Trump’s escalated tariff threats, it continues a longer-running, industry-specific dispute between the two countries. Under the Biden administration, the U.S. had investigated China’s ship industry for unfair trade practices. Services fees and port-entry fees against Chinese ships were set to go into effect Tuesday.
Escalating trade tensions can push gold values higher by increasing safe-haven demand.
The opening price of gold futures on Tuesday is up 0.5% from Monday’s close of $4,108.60 per ounce. Tuesday’s opening price is up 4.3% from the opening price of $3,959.40 one week ago on October 7. In the past month, the gold futures price increased 13% compared to the opening price of $3,655.50 on September 12. Over the past year, gold is up 55.6% from the opening price of $2,655 on October 14, 2024.
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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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