Can you buy gold now? Teaching you precise entry points from fundamental and technical perspectives

Is it a good time to buy gold? This is a question many investors are currently concerned about. Since October 2023, gold prices have surged dramatically, breaking through key levels like $2,700 and $4,000. Market professionals generally hold a positive outlook for the medium to long term. But with prices already at historic highs, how can you determine if now is the right time to enter? This article will analyze both fundamental and technical factors to help you make an informed decision.

Why Are Gold Prices Hitting Record Highs? — Three Major Factors Driving the Rally

The record-high gold prices fundamentally stem from dramatic shifts in supply and demand. When fiat currencies or bonds become less attractive, investors—including central banks, institutions, and individuals—turn to alternatives like gold. The core factors fueling this shift are threefold:

First, Excess Global Liquidity Raises Concerns About Cash Value

Since 2020, the U.S. has implemented unlimited quantitative easing, which, while resolving domestic liquidity issues, has exported inflationary pressures worldwide. In 2022, aggressive rate hikes were undertaken to control inflation, leading to significant devaluation of global debt. Confidence in the U.S. dollar and U.S. Treasuries has declined, prompting more investors to realize that cash and traditional bonds are losing purchasing power, thus seeking refuge in gold.

Second, Competition from Alternative Assets Intensifies, but Gold Maintains Unique Status

The rise of cryptocurrencies like Bitcoin reflects similar market sentiments—distrust in traditional financial assets. Bitcoin has surpassed $100,000, reaching new highs, and even U.S. policymakers have considered it a strategic reserve. The strength of these emerging assets further boosts demand for risk assets and alternatives, pushing gold prices higher. Compared to Bitcoin’s high volatility, gold remains a long-standing, highly liquid safe-haven asset, retaining its appeal.

Third, International Financial Regulations Are Evolving, Elevating Gold’s Status

The Basel III reforms reclassified gold from Tier 3 to Tier 1 capital, meaning gold’s liquidity is now on par with government bonds and cash. This change incentivizes global banks to increase gold holdings. Unlike the continuously printed fiat, gold’s scarcity remains unchanged, and mining costs are rising annually, enhancing its store of value.

Opportunities and Challenges for Gold Investment in the Current Environment

Opportunities: — Strong Fundamentals for the Long Term

According to a Reuters survey of analysts, the average gold price is projected to reach around $4,275 by 2026. This indicates a bullish outlook for gold’s medium to long-term prospects. As long as the U.S. continues its easing policies, the dollar faces depreciation pressures, and geopolitical risks persist, gold’s attractiveness will remain. For investors with a medium- to long-term horizon, gold still offers valuable allocation opportunities.

Challenges: Risks from High Price Levels

Gold is already at historic highs, with limited upside potential. Additionally, increased competition—such as bonds regaining appeal due to rate cuts, and Bitcoin attracting funds through policy support—may divert demand away from gold. Future gains are expected to slow, and market volatility could increase, posing risks for short-term traders.

Implications for Conservative Investors

Comparing gold and Bitcoin shows that Bitcoin has surged much more over the past year, with higher volatility. For conservative investors seeking stable returns, gold remains a relatively reliable choice. However, it’s important to recognize that gold is not risk-free; entering at high levels requires careful timing.

How to Precisely Time Your Entry — Combining Technical and Fundamental Analysis

Is now a good time to buy gold? The answer depends on whether you can identify a reasonable entry point. Blindly chasing prices can amplify risks, but using technical and fundamental analysis can significantly improve success rates.

Technical Signals for Entry Points

From a technical perspective, gold prices are still in an upward channel. Based on Bollinger Bands, prices fluctuate within the bands, with the lower band serving as a relatively safe entry zone. When gold dips toward the lower Bollinger Band, it often signals a good buying opportunity. Traders can consider buying near the lower band, avoiding chasing high prices.

Fundamental Indicators to Watch

Fundamental analysis should focus on three key indicators:

1. U.S. policy stance—rate cuts generally favor gold.
2. Geopolitical risks—increased tensions boost safe-haven demand.
3. U.S. dollar trend—a weakening dollar supports gold prices.

When these factors align favorably, even at high prices, it may be worthwhile to participate cautiously. Conversely, if U.S. Treasuries yields rise, the dollar strengthens, and geopolitical risks subside, it’s better to stay on the sidelines.

Practical Entry Tips

For those ready to buy, consider staggered entries rather than lump-sum purchases. Buying in portions near the lower Bollinger Band reduces risk and captures rebounds. Set clear stop-loss levels (e.g., 3-5% below entry) and profit targets (e.g., near the upper band or previous highs).

How to Minimize Costs When Investing in Gold

Gold investment options vary, but choosing the most cost-effective and liquid tools is crucial.

Physical Gold: High Costs and Poor Liquidity

Buying gold bars or jewelry involves significant spreads and storage costs. For individual investors, this is inefficient. Central banks hold physical gold for strategic purposes, but for retail investors, physical gold is less practical.

Futures and Options: High Barriers and Technical Complexity

Gold futures offer good liquidity and low spreads but require high capital, margin, and technical expertise. Gold options have nonlinear payoffs and are complex, making them unsuitable for most retail investors. These derivatives are better suited for institutions and professional traders.

CFD Contracts: Cost-Effective and Flexible

CFDs track the spot gold price and allow leveraged trading. They are convenient, avoiding the need for rolling over contracts like futures or dealing with complex options. Importantly, CFDs typically have the lowest trading costs—around 0.1%—making them the most economical choice for retail investors.

Cost Comparison of the Three Methods

Physical gold spreads can be 3-5%, futures depend on margin efficiency, while CFDs usually have around 0.1% costs. For medium-sized retail investors, CFDs offer the best cost efficiency.

Who Should Invest in Gold — Different Stakeholders and Their Logic

Gold is a hybrid asset—combining currency, commodity, and broad asset class features—so various entities from central banks to individuals participate, each with different investment rationales.

Central Banks: Strategic Reserves and Inflation Hedge

Central banks hold gold mainly for two reasons: to hedge against inflation, as gold’s long-term purchasing power remains relatively stable, and as a strategic reserve, given gold’s high creditworthiness during crises and geopolitical tensions.

Institutional Investors: Risk Management and Portfolio Diversification

Hedge funds and asset managers regard gold as an essential component. Its low correlation with stocks and bonds helps smooth portfolio volatility and reduce overall risk, forming a core part of institutional allocations.

Individual Investors: Diversification and Wealth Preservation

For individuals, gold serves as a diversification tool and a hedge against inflation. Proper allocation can reduce risks from concentrated assets and help preserve wealth over the long term, tailored to personal risk tolerance and investment horizon.

Who Is Most Suitable to Buy Gold Now?

Conservative investors, long-term holders, and those seeking to hedge other risks are most suited to enter now. Aggressive traders or short-term speculators should wait for clear technical buy signals rather than chasing high prices.

Summary: Is It a Good Time to Buy Gold? Three Key Points Before Entering

Is now a good time to buy gold? The answer isn’t simply “yes” or “no,” but depends on specific conditions.

First, Confirm That the Fundamental Support Remains

As long as U.S. policies stay accommodative, the dollar faces depreciation, and global uncertainties persist, gold’s long-term value remains intact. Absent a scenario where the U.S. forces other countries to hold specific proportions of U.S. Treasuries, gold’s strategic role won’t change.

Second, Strictly Identify Technical Entry Points

Avoid chasing high prices. Wait patiently for dips near the lower Bollinger Band or during heightened geopolitical risks that increase safe-haven demand. This approach significantly improves entry safety.

Third, Choose the Most Cost-Effective Investment Tools

If you decide to buy, select tools with the lowest costs and highest liquidity. For retail investors, gold CFDs offer a practical balance of low cost and high flexibility.

Is it a good time to buy gold? The key isn’t the price level but your ability to precisely time the entry. With solid fundamental judgment, technical analysis, and risk management, gold remains a vital asset for navigating market uncertainties.