Should You Buy Gold Before The Next Fed Cut?
The Federal Reserve kept the benchmark federal funds rate unchanged at its January meeting, but many experts expect interest rates to drop later this year. Investors may wonder if they should add gold to their portfolio before then.
Here’s what you need to know, especially if you’re in or about to retire.
How gold reacts to Fed cuts
A central bank rate cut could weaken confidence in the US dollar. When that happens – and especially when inflation is expected to rise, which is likely when inflation stimulates the economy – investors often turn to gold as a safe haven. As a result, the price of gold can rise.
Gold enjoyed a strong rally in 2025 accompanied by multiple rate cuts. While other assets such as stocks also rose, gold did the most with gains of more than 65% for the year. However, past performance does not guarantee future returns and no one can predict exactly how gold will react to interest rate cuts.
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Time risks for retirees
Retirees should not use investment strategies that depend on the right time period. There is a risk that the price of gold will fall after you invest in the precious metal, and a shorter time horizon means your portfolio has less time to recover from a downturn.
Dollar-cost averaging, which is a strategy that involves investing a regular amount of money at fixed intervals, is a method that experts often recommend. It helps ensure that you don’t invest based on your emotions, and it allows investors to ride rallies and get more for their money during downturns.
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How much to invest in gold
Many experts recommend allocating more than 5-10% of the portfolio to gold. This allows investors to achieve some diversification – reducing their exposure to the stock market – while still receiving returns from stocks, bonds and other assets.
Investors can buy physical gold, such as coins and bullion. Physical assets may give you more control, as you can keep them in your home or in a safe place like a bank, but they are more difficult to acquire, store and sell if needed. In addition, there are potential insurance and maintenance costs.
Investors can easily gain exposure to gold through an exchange-traded fund (ETF). Some ETFs directly track the price of gold, while others offer exposure to gold mining companies.
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How to accumulate gold in a systematic way
For most investors, the Fed’s rate decisions should not determine whether or not you buy gold. That decision should come down to your goals, risk tolerance and time horizon.
A small allocation to gold can act as a hedge against inflation and economic uncertainty, meaning owning your portfolio can be beneficial whether the Fed cuts rates or not.
