If You'd Put $10,000 in Gold a Year Ago, Here's What You'd Have Today

Given that inflation has not only remained elevated but actually inched higher over the course of the past twelve months, one would presume gold prices have also soared during this stretch. The precious metal is considered one of the very best hedges against inflation, after all.

This time around, however, that's not been the case. Had you invested $10,000 a year ago when gold's price was $4,116.30 per ounce, today that holding would only be worth $9,838.45. Gold's actually fallen to a per-ounce price of $4,049.80.

Gold Price in US Dollars data by YCharts

What went wrong? It's worth noting that gold prices soared between 2023 and early this year, largely in response to the firm inflation also in place during this timeframe. It's arguable that defensive-minded investors simply acted too aggressively, bidding the commodity up to an unsustainable price.

It's also worth pointing out, however, that the U.S. dollar has been recovering value since early this year after plunging 11% during the first half of last year -- the greenback's worst first-half of any year going back several decades -- for a range of reasons including uncertain international trade policies and falling interest rates. Since gold prices are quoted in U.S. dollars, as the dollar grows in relative value, it undermines the commodity's market price (although not necessarily for overseas investors after adjusting for foreign currency exchange rates).

The big take-away for interested investors is that even though gold is still generally a good hedge against inflation and a smart way of diversifying your portfolio beyond conventional stocks, gold prices aren't necessarily any more predictable in the near term than stock prices are. Don't be too discouraged if your position in the precious metal hasn't been all that hot of late. It's a cyclical headwind that should pass soon enough.

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