When should you buy gold?

We often get asked, “Is now the best time to buy gold?”. Obviously with hindsight, it’s easier to identify periods of time when gold’s value rose the most.

Given its negative correlation to stocks and the global economy, tracking market trends is one way to gauge the ideal time for gold investments.

Holding gold over the long term has proven over the years to provide a secure store of wealth and outperform inflation.

The rule of thumb is, “It’s not about timing the market, but time in the market.” In other words, a long-term investment in physical gold often yields better returns than trying to time the market’s highs and lows.

Historical gold price averages over the past 50 years indicate the best time of year to buy gold is at the start of each calender year and again in the middle of summer, early July. Prices have tended to push higher at the fastest rate after these periods. History doesn’t repeat itself, but it does rhyme.

While attempting to buy at the market’s lowest prices and sell at its highs may sound like a wise strategy, even financial experts agree it’s nearly impossible to achieve perfectly. And the problem with averages is they tend to paper over the details and factors which can skew these seasonal themes.

So we thought we’d equip you with 9 hacks and considerations to determine the best time to buy gold.

• Timing your gold investment involves multiple factors, from economic trends to geopolitical events.
• Dollar Cost Averaging (DCA) offers a risk-mitigated approach to investing in gold over time.
• Seasonal trends and supply shortages can influence the best times to buy gold.
• Align your gold investment strategy with your long-term goals and risk tolerance for optimal results.

A good time to invest into gold can be during economic downturns, high inflation and geopolitical unrest.

In times of economic uncertainty or financial crisis, gold serves as a reliable hedge against inflation. Timing is about stacking the odds in your favour. By looking at market fundamentals and historical trends, you can choose to invest in assets like gold, which are likely to perform well during certain periods.

Unlike cryptocurrency, gold has existed as an investment for centuries, so we’re able to see how gold has performed before to help predict how it might perform over the next few years.

Gold has a long history and track record, making it easier to predict its price performance based on past trends. As a safe-haven asset, investors often turn to gold when the economy is struggling, stocks are falling, and inflation is rising.

Geopolitical tensions can significantly impact gold prices, making it a more attractive investment during uncertain times. Events such as wars, elections, or economic sanctions can create instability, driving investors towards safe-haven assets like gold. Being aware of the global political climate can help you time your investment to capitalise on these price spikes.

Insider Tip:

If you feel the economy is set to struggle, it could be an ideal time to buy gold. But timing is crucial, and being ‘ahead of the curve’ will separate really successful investors from the rest. Buying gold towards the end of a bearish economic cycle will mean that most of gold’s profits during that cycle will already have been missed.

If you believe in the long term status and growth potential of an asset, then buying when investor interest (and prices) in that asset are low, will yield better returns than investing when everyone else is. Counter intuitively, the optimum time in the economic cycle to buy gold can be when its price is floundering and no one else sees the economic crash around the corner.

Stick to your long term investment strategy rather than buying and selling gold according to your emotions.

The price of gold can sometimes be volatile, making it a liquid asset but also a risky one in the short term. It’s important not to panic or get too excited during big weekly price moves. In the short term, the direction of the gold spot price can be impossible to predict. However, over the long term, gold has steadily risen in price.

The Fear of Missing Out (FOMO) can tempt naive investors into buying gold after it’s price has pumped massively. Greed and fear can typically disrupt an investors plans on when they intended to buy or sell gold.

Gold is known as a great hedge against inflation because it has proven to maintain its purchasing power over the decades when paper currency has fallen in value.

Insider Tip:

While shrewd (or lucky) timing can really boost returns, we’d always encourage you to keep up with the gold forecast and for your gold investment to be a long-term commitment to really reap benefits.

Dollar Cost Averaging (DCA) is a strategy that involves buying little and often, regardless of its price. This approach can be particularly beneficial for timing your gold investments for several reasons:

1. Risk Mitigation: By spreading out your purchases, you reduce the risk of investing a large amount at an inopportune time.
2. Market Timing: DCA removes the need to time the market perfectly, which is especially useful given the volatility of gold prices.
3. Smoother Returns: This strategy can smooth out the highs and lows in the average purchase price of your gold investment, making it less susceptible to market fluctuations.

Insider Tip:

Buying small amounts of gold regularly means you pay full premium on your gold. Quantity discounts are available from dealers when larger amounts are bought.

A twist on the DCA strategy is to keep a cash reserve to buy gold whenever you see a significant price dip. While the gold price may go lower in the short term, buying in tranches can iron out price volatility. Buying in larger amounts, slightly less often will benefit from paying lower premiums on your purchase. 

Secondly, gold’s general trend in the long term is upwards. So, in theory, buying as much gold as possible immediately should yield better returns than buying as the price rises.

While we haven’t observed a clear price trend linked to specific times of the day, some experts argue that the live gold price tends to spike just before the daily LBMA fixes at 10.30am and 3pm. If you believe this to be true, you may wish to buy at other times.

Others claim they see trends when certain markets like Asia or the US open. Major economies, especially the US, still impact the gold market the most.

With that in mind, be prepared for gold prices to move most in the London afternoon if the US releases particularly important economic data.

While it’s challenging to predict the best time to buy gold, historical data suggests certain months may offer better opportunities. For example:

• January: Often sees an average increase of 1.3% and a surge in buying, possibly due to new investment resolutions for the New Year.
• August and September: These months have shown a 1.2% and 1.9% average increase in gold prices, respectively, possibly due to the Diwali festival when gold buying traditionally increases.
• December: Another favourable month with a 1% average increase, potentially due to end-of-year investment adjustments.

With so many factors influencing the gold price, it’s impossible to identify the exact reasons. But we tend to see investors keen to address finances and investments in January to kick start their year and also an increase in buying for Diwali in the autumn.

Insider Tip:

We often (but not always!) witness prices dipping slightly just before a daily LBMA fix when the price trend for the day is upwards and see it spike prior to the official fix on a downward  price trend day. Use this theme to lock in prices around the 10.30am or 3pm fixes.

A good timing strategy for buying gold is the ‘contrary approach’. Instead of following the investment herd, buy gold when no-one else is.

Investing when gold is in a bull run, not only means the underlying price can already be high, but also that premiums are inflated.

During certain periods of high demand, the supply of gold coins and gold bullion, in particular, can be tighter than usual. Buying during these times can lead to paying excessive premiums for your gold coins.

Throughout events like the Covid pandemic and subsequent economic fallout, the supply of new coins has struggled to keep up with demand. Even more apparent has been the lack of gold sellers during these times. This has led to premiums on second-hand Sovereigns soaring. To buy at the best prices, focus on buying when supply is abundant.

Choosing to buy gold when the asset class in unpopular, stagnant or even falling can enable investors to negotiate even better deals with precious metals dealers. It’s during these periods that dealers will offer their best sales and have more flexibility on prices.

The disadvantages of the contrary strategy are the opportunity cost and need for patience. Buying gold in a stagnant market may lock in low purchase prices, but it also uses valuable capital which could be used to profit from other investment classes that may be thriving during this period. It may be that the next gold bull run is several years away, so locking up money requires a long-term outlook.

Insider Tip:

Be flexible with which coins or bars you buy if you’re keen to invest when certain types of gold are in extremely short supply. That way you can still grow your portfolio at the time you want, without being held ransom to spiralling premiums on certain coins.

Using technical indicators can offer more precise moments to optimize gold buying opportunities.

Examining historical price and volume charts can identify trading trends. By analyzing gold price movements, support/resistance, momentum indicators, and futures market positioning, technical traders gain insights on opportune times to enter or exit positions.

A breakout above a previous long-term high could signal the next bull run, while overbought conditions warn of short-term tops. Gold futures prices typically front run spot prices as leveraged speculators react swiftly to news and events. Monitoring futures positioning extremes also provides perspective—numerous new long contracts likely indicate an exhausted crowd on one side.

While technical signals can’t guarantee upcoming gold price movements, they can significantly improve probability when combined with fundamental catalysts. This approach is suited only for experienced traders who are willing to put in the constant work required to keep up with the ever-evolving markets.

Insider Tip:

Trading on technical is best for active in and out trading of gold instruments rather than physical gold investment.  

Use our automated portfolio builder to get suggestions based on various investment objectives.

Before you even think about buying gold, sketch out a well-defined exit strategy. Knowing your selling points is as vital as understanding when to buy. This foresight aligns your gold investment with your financial objectives and adds a layer of precision to your market entry.

A robust exit plan should be versatile, adapting to fluctuating market conditions and potential tax ramifications.

By pinpointing when and why you’ll sell, you’re setting the stage to maximise profits and cut losses. This holistic view of both your entry and exit creates a more resilient gold investment strategy, increasing your odds of financial success.

Insider Tip:

Chat to different gold dealers before you invest. It’s important to buy gold from a dealer you feel will provide the best relationship and genuine guidance. Developing this dialogue with the right broker partner will ensure that you work together to sell your gold for the optimum price.

The right time to buy gold is very simply when it best suits your circumstances.

Focussing your timing on macro influences may help buy gold at lower prices and sell when it’s higher. But that doesn’t necessarily mean it’s the best time for everyone to buy gold.

Individual circumstances and your lifestyle stage are just as important in choosing when to buy gold. Certainly we never recommend borrowing money to invest in gold, even if market fundamentals suggest the price could soon skyrocket. Investors should on decide to invest when they can afford to. Having to sellback gold very soon after buying due to misjudged cashflow, can prove a costly mistake due to bid/offer spreads and market movements.

Investment objectives and needs also vary greatly depending on someone’s life stage. Younger investors may have more appetite for risk and so may be tempted to focus their investments on a higher risk/higher return strategy. Conversely, more mature investors may be looking to protect the wealth they’ve already built over many years, whereby gold can be a necessity rather than a luxury.

Clearly, the best time for someone to buy gold is when it will bring the most benefits to their life stage and lifestyle. With gold not paying any income as an asset, some investors may feel it doesn’t meet their needs, while bonds does.

Insider Tip:

The suitability of an asset class to your particular investment objectives and life needs is the priority rather than general market timing.

Before diving into the gold market, crystallise your investment goals. Are you in it for the long haul, or are you eyeing short-term profits? Your objectives will dictate your investment approach and influence the ideal timing for entering the gold market.

• Long-term Wealth Preservation: Physical gold, whether in coins, bars, or bullion, is the go-to for those focusing on long-term wealth preservation. It’s a tangible asset that has consistently held its value, making it perfect for generational wealth transfer or as a buffer against economic instability.
• Short-term Gains: If quick profits are your aim, consider paper gold options like Gold ETFs or gold mutual funds. These offer liquidity and capitalise on short-term market fluctuations.
• Income Generation: Gold mining stocks or derivatives can be enticing for those looking at income generation. These not only depend on gold prices but also on the mining company’s performance, adding a layer of complexity and potential for higher returns.

Understanding your investment goals will help you choose the right vehicle and guide you in asset allocation, risk assessment, and setting realistic expectations for returns.

Here are answers to some of the most frequently asked questions about investing in gold and its timing:

Which month is best to buy gold?

If you’re eyeing the calendar, January, August, September, and December have historically been good months for buying gold. Prices tend to go up during these times, so you might catch a good deal.

Is now a good time to buy gold in the UK?

The “right” time really depends on a bunch of things like what’s happening with the economy, inflation, and what you’re hoping to get out of your investment. So, do your homework and align it with your financial goals.

Is gold a good investment in 2023?

Gold’s got a solid reputation for being a safe bet over the long haul, especially if you’re looking to protect your wealth from things like inflation. So yeah, it could very well be a smart move in 2023. Just make sure it fits with your overall financial game plan.

Which time of day is better for buying gold?

While there’s no hard and fast rule, some traders suggest avoiding buying right before the LBMA sets its daily gold price at 10:30 am and 3 pm. Prices can get a bit jumpy before the fix and settle down afterwards.