Gold (GC=F) June futures opened at $4,769.30 per troy ounce on Tuesday, roughly even with Monday’s closing price of $4,767.40. Gold gained in early trading, moving above $4,800 as of 6:35 a.m. ET.
Silver (SI=F) May futures opened at $75.66 per ounce on Tuesday, even compared with Monday’s closing price of $75.67. The price of silver rose to $77.91 by 6:35 a.m. ET.
Gold and silver prices showed strength today after three days of sluggish performance, as traders weigh reports on the Iran war. On Monday, President Trump said Iran wants to make a deal, giving some investors hope the conflict will end diplomatically. Brent Crude (BZ=F) fell below $100, and the US Dollar Index (DX-Y.NYB) also declined. Lower oil prices and a softer dollar tend to support strength for the yellow metal. The U.S. has imposed a military blockade on ships traveling to Iranian ports through the Strait of Hormuz after peace talks failed over the weekend.
The primary concern for traders is that an extended conflict increases the inflation risk in the U.S. A sticky and severe inflation cycle could prompt the Fed to raise interest rates, which tends to reduce pricing and demand for gold.
Learn more: Who decides what gold is worth? How gold prices are determined.
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.
Learn more: How to invest in gold in 7 steps
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, Yahoo Finance has been tracking the historical price of gold 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.
Learn more: Thinking of buying gold? Here’s what investors should watch for.
Whether you’re tracking the price of gold and silver since last month or last year, the price of gold and silver charts below show the precious metals’ change in value.
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