What Is the Best Time to Buy Gold in 2022?

Gold has been a symbol of prosperity and stability for many centuries. It has successfully retained its value through time, moreover, continues to be one of the largest financial assets in the world. Despite having proved to be an efficient diversification and hedging instrument, some investors start to doubt gold investment qualities. In this article, we will outline the main features of this outstanding commodity and find out if it's still worth being added to your investment portfolio.

Is Buying Gold a Good Investment?

Gold is a unique asset that managed to maintain its value not just for years but whole centuries. Although the price of this precious metal can fluctuate in the short term, in the long run, it has proven to show only the uptrend. For example, in 2003 the price of gold accounted for $416.3 per troy ounce (approx. 31.3 grams) while in 2020 its value reached $1887,6 per ounce. Stability, however, is not the only reason that caused its immense popularity. Let's consider some others.

• Diversification. Since gold price is inversely correlated with other assets, it can help investors efficiently mitigate the volatility of their portfolios. It means that when the stock market drops, the price of gold is likely to increase.
• Hedging against inflation. Rising inflation, which decreases the purchasing power of assets, is one of the biggest concerns of any investor. Gold, in turn, has proven to usually be an effective hedging instrument against it. When the fiat currencies lose their value, gold price, in contrast, normally goes up. What's more, due to its historical stability gold inspires confidence among investors and motivates them to buy it during uncertain market conditions, which positively influences its value.
• Protection from political and economical uncertainty. Gold is often considered a safe commodity in case of any economic or political tensions. As well as with stock markets, the gold price increases in value when the country's political or economical situation is getting tenser.
• High demand. The long history of gold plays a crucial role in its popularity nowadays. In many countries, it remains a symbol of prosperity and is commonly used as a form of savings. As a result, this metal continues growing in demand, pushing more investors to add it to their portfolios.

The Price of Gold in 2022

It's necessary to mention, that the gold price is quoted per one ounce of gold, gram, or kilo. The troy ounce (shortened as oz t and equal to approximately 31.1 grams) is one of the most popular measurements.

When it comes to the historical trend, the price of gold has seen a huge surge. From the year 2000 when it was $279 per ounce, it soared to $871 in 2008, and as the economic situation continued to fall, in 2012 its value almost doubled reaching $1668. For the next seven years, the gold's price slightly dropped but still was floating at a historically high level of around $1250. In 2020 the COVID-19 outbreak became the reason for a new massive rise in the gold value, its average price per year reached $1770 per ounce. Investors were seriously concerned about the economic uncertainty and, as the theory suggests, started to put more money in gold to hedge their funds, this way, increasing its value.

In view of the current situation, in which the economic environment is again showing a negative trend, the demand for gold will become increasingly strong again.

Factors Affecting the Price of Gold

Before diving into gold trading it's important to understand that its price movements are caused by a big variety of factors. Here are the most significant of them.

1. Demand. Gold is a multi-purpose metal that is involved in many different areas, such as jewelry production, the technological sphere, the monetary policy of central banks, gold Exchange-Traded Funds (ETFs), etc. Thus, the growing demand for this precious metal makes its price surge.
2. Central banks reserves. Even when the Bretton-Woods system collapsed, putting an end to the Gold Standard, gold as a commodity still kept some of its influence on the monetary policy of countries. Therefore, when central banks buy this asset to diversify their reserves and get rid of paper currencies, gold price tends to increase.
3. Gold production. It is becoming more challenging for the gold mining companies to get to this metal, gold miners have to take extra risks, etc. This can become another reason for the rise in the gold value.
4. Currency fluctuation. The movements in the value of currencies, especially in the US Dollar, have an inverse influence on the price of gold. The drop in the US Dollar makes the gold price go up, and conversely.
5. Geopolitical factors. Negative economic or political news increase market uncertainty, making investors allocate more of their capital to gold. It significantly increases the demand for this metal and makes its price jump.

Best Time of the Year to Buy Gold

Considering the price of gold on the long timeline, it's possible to notice that its fluctuations have a certain tendency. At the beginning of the year (January, February), its value usually tends to grow. Then, during the spring and summer months, its price reaches a plateau and doesn't show any significant movements. However, in the late summer and autumn, it normally starts to climb up again. Thus, the best time to buy gold during the year can be the first part of January, March, the beginning of April, and the time on the crossing between June and July.

Of course, it's not a strict rule. In history, there were years and times when the gold value was declining or surging against established trends. Therefore, once having decided to buy this precious metal, like any other asset, investors must conduct thorough market research and consider all the major factors that could influence its price.

Best Month of the Year to Buy Gold

As the statistics show gold has the lowest, thus, most profitable price to buy, at the very beginning of January. This is usually considered the best time to allocate your money to this asset. However, if you missed January, according to historical data, the gold price often tends to drop to a rather high extent in March, providing investors with another good chance to enter this market.

Ways To Invest in Gold

There are various ways to invest in gold. Each of them comes with its features, advantages, and risks. Let's have a look at some of them.

• Physical gold implies direct ownership of the metal. It can be presented in three main forms: gold coins, gold bullions, and jewelry. Although physical metal is a good tool for inflation hedging, trading it is more challenging. What's more, investors have to find a place where to store it and pay additional premiums and taxes.
• Gold stocks are usually shares of gold mining companies that don't offer investors ownership over the asset. This type of investing in gold is easier and potentially more beneficial in the long term, yet, it could be riskier.
• Gold ETFs are funds that consist of assets backed by gold. They allow investors to get exposure to this metal by opening significantly smaller trades, thus, depositing less capital. As well as gold stocks, they don't provide traders with ownership rights. Moreover, their market performance may not coincide with the physical gold price.

Future Outlook for Gold

Investment experts see the development of the events in the gold market differently. In the opinion of the World Bank, the price of gold will continue to decrease in the upcoming years. They expect it to drop to $1600 in 2022, and $1550 in 2023. The opposite point of view is represented by the Goldman Sachs investment bank, whose analysts believe that gold price is undervalued nowadays, thus, is going to surge up to $2500 if the economy slows down. Forbes experts suggest that due to the growing demand, gold will become even more attractive as an asset. As for the Bank of America, it predicts the gold value to go up by 7% reaching the level of $1925 in 2022.

Conclusion

Gold has always been an attractive investment asset. It has gained the trust of traders due to its stability, diversification, and hedging features. Moreover, there are many different approaches to trade it: via gold stocks, physical metal, ETFs, etc., so every investor can choose one complying best with their trading style and behavior. Once having decided to trade this precious metal in one way or another, it's necessary not only to conduct detailed market research but also to take into account the time of the year you want to buy it. As history shows, the price of gold follows approximately the same trends throughout the year.

FAQ

Is 2022 a good time to buy gold?

Financial experts have different views on this issue. Some of them, for example, the World Bank, expect the gold price to drop. Some others, including the Bank of America, Forbes analysts, and Goldman Sachs, predict that its value will continue growing. However, once you decide to invest in the yellow metal, keep track of other factors influencing its price, such as monetary policies of central banks, gold supply and demand, geopolitical news, etc.

What is the highest price of gold in history?

The historical height of gold price was reached in 2020 when it hit $2067. This was mostly caused by the growing market uncertainty caused by the COVID-19 outbreak. Some smaller peaks in gold value happened in 2011 and 2012 during the economic downturn. Nowadays, the price of gold stays high at about $1905 per ounce and is expected to grow.

Which country has the cheapest gold price?

Hong Kong is considered to be the cheapest place to buy gold. The recent gold price there accounts for approximately $1894 per ounce. Other countries known for lower rates are Switzerland, the US, Austria, Singapore, and others.

Will the gold price go down in 2022?

Financial experts have different views on this issue. Some of them, for example, the World Bank, expect the gold price to drop. Some others, including the Bank of America, Forbes analysts, and Goldman Sachs, predict that its value will continue growing,

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