Waiting until after the September Fed meeting to invest in gold could make sense, but not in every situation.
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The Fed will meet September 15 and 16, and there is considerable uncertainty about what policymakers will do. While a majority of economists last month expect the central bank to leave its benchmark rate unchanged at its current 3.50% to 3.75% range, the CME Group's FedWatch tool shows that expectations for another rate hike have following stronger economic data and renewed inflation concerns.
That uncertainty creates a dilemma if you're considering adding gold to your investment portfolio. Investing in gold before the announcement means accepting the possibility that the Fed's decision could quickly push prices in either direction. Waiting provides more information, but it could also mean missing an opportunity if gold moves higher before or immediately after the meeting. So, what route should you take? That's what we'll examine.
Waiting to invest until after the Fed's September meeting could make sense if you're concerned about buying gold just before a potentially significant price move. However, there are also reasons you may not want to put your investment plans on hold solely because of the upcoming decision.
The main reason to wait is that the Fed's decision could put downward pressure on gold prices. The central bank is currently expected to choose between holding rates steady and raising them, and stronger-than-expected August job growth has kept the possibility of a hike firmly in play. Upcoming inflation data could further shift those expectations before policymakers meet next week.
That matters, in large part, because gold doesn't pay interest. When interest rates rise, yields on certain interest-bearing investments can rise along with them, making gold less appealing by comparison. Expectations for higher rates can also push Treasury yields and the U.S. dollar higher, both of which can create pressure on gold prices. In fact, gold's price fell after the strong August jobs report increased expectations for a September rate hike.
So, if the Fed raises rates — or signals that additional increases could be coming — waiting to buy gold could potentially allow you to purchase it after prices decline. Even if the Fed leaves rates unchanged, waiting until after the announcement would remove at least some of the uncertainty currently hanging over the gold market.
But there's an important downside to that strategy: Gold prices could just as easily move higher while you're waiting.
For example, if the Fed holds rates steady and signals that it isn't in a hurry to raise them, Treasury yields could ease and gold could become more attractive to investors. And interest rates aren't the only factor driving gold prices right now, either. Geopolitical tensions and other economic concerns continue to support demand for the precious metal, which means gold could climb even if the Fed takes a relatively cautious approach.
That's why the decision ultimately depends more on your reason for investing than on what happens at one Fed meeting. If you're hoping to make a short-term investment and are particularly sensitive to buying at the wrong price, waiting for the Fed announcement could provide more clarity. If you're buying gold as a longer-term portfolio diversifier or hedge against economic uncertainty, though, trying to time your purchase around a single interest rate decision may be less important.
.How to invest in gold around the Fed meeting
If you want gold exposure but aren't comfortable committing your full investment before September 16, you don't necessarily have to choose between buying everything now and waiting altogether. One option is to spread your purchases out. For example, if you planned to invest $5,000 in gold, you could invest a portion before the meeting and the remainder afterward. That approach won't guarantee you the lowest possible price, but it can reduce the risk of putting all of your money into gold immediately before a large move.
It's also important to consider the type of gold investment you're making. Physical gold bars and coins, for example, generally make more sense as longer-term holdings because dealer premiums and buy-sell spreads can make frequent trading expensive. Gold exchange-traded funds (ETFs), meanwhile, can offer more flexibility if you're primarily looking for exposure to changes in the market price.
Whatever route you take, you should avoid letting the Fed announcement become the sole reason you buy gold. Interest rates are important to gold prices, but they're only one piece of the picture. Inflation expectations, Treasury yields, the strength of the dollar, central bank and investor demand and geopolitical uncertainty can all affect where prices move next. And with many of those forces pulling gold in different directions right now, even knowing the Fed's September decision won't eliminate the uncertainty surrounding the metal's next move.
The bottom line
Waiting until after the September Fed meeting to invest in gold could make sense if you're worried about near-term price volatility or want more clarity on the direction of interest rates. But waiting also carries the risk that gold prices rise before you buy, particularly if the Fed's decision is less aggressive than markets expect or geopolitical risks intensify.Instead of trying to perfectly time the announcement, consider how gold fits into your broader portfolio and investment horizon. If you're buying primarily for long-term diversification, splitting your investment into multiple purchases may offer a middle ground that limits the importance of getting the timing of one Fed meeting exactly right.