3 reasons to invest in gold as inflation cools

Inflation has been problematic for much of the last two years, hitting its highest point in more than 40 years in June 2022. That resulted in the Federal Reserve hiking its federal funds rate to its highest point since 2001 to tame it. But inflation has steadily come down since 2022, with the latest report released on Wednesday showing the rate dropping in April to 3.4% from March’s 3.5%. While a small drop, it’s a step in the right direction for borrowers and investors looking for improved portfolio performance.

Against this backdrop, some may find themselves wondering about the benefits of investing in gold. Gold has been a valuable hedge against inflation in recent years and the price of the precious metal has broken numerous records already in 2024. But is it worth investing in as the inflation rate declines or are investors better off looking for alternative assets? Below, we’ll break down why a gold investment still makes sense, even with inflation cooling last month.

Learn more about the benefits a gold investment can provide here now.

3 reasons to invest in gold as inflation cools

Here are three reasons why you should consider investing in gold now, even after the new inflation numbers were released:

The inflation drop was minimal

Sure, inflation fell in April. But the drop was minimal and it came after the rate rose in February and March, respectively. So gold is still beneficial to add to your portfolio now. Thanks to its historic ability to retain and even grow in value during inflationary periods, your portfolio can still use the protection a gold investment can provide. And, considering that the inflation rate is still 1.4% above the Federal Reserve’s target 2% goal, it makes sense to invest in gold until this inflationary cycle is truly finished.

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Gold has other benefits

Gold is popular for its ability to hedge against inflation, but it has other benefits investors can utilize, too. It’s a great portfolio diversifier, for example, by performing differently than stocks and bonds usually do. And unlike those assets, it can be tangible and is easy to buy, sell, and buy again in a variety of physical forms. Finally, right now, gold is ubiquitous and easy to invest in, both online and in-person, requiring less involvement and knowledge than some other assets may require.

The price could become prohibitive

Gold has surpassed numerous price records so far in 2024 and may continue to do so as long as inflation remains a top concern. With the price of gold sitting at $2,365.07 per ounce today, it makes sense to get involved now before the price becomes prohibitive. And considering that a slight uptick in the inflation rate for May could cause that increase, as could multiple other factors, it makes sense to be proactive today even despite the cooler inflation report. 

The bottom line

Inflation dropped last month but there’s no telling if that was an anomaly or an indicator of further cooling ahead. In this climate, then, most investors would still be well served by pursuing gold now. After all, the April inflation drop was minimal and gold has other benefits besides just hedging against inflation, anyway. And, with a growing and volatile price now, investors may want to add some gold to their portfolio today before the price prevents them from acting.

Learn more about investing in gold in today’s inflationary climate here.