Prices fall as tensions in the Middle East flare

Gold August futures (GC=F) opened at $4,520 this morning, down from Tuesday’s close, but the price of gold is falling this morning. As of 7:04 am ET, the price of gold fell to $4,487.

The price of gold is falling this morning as tensions in the Middle East continue to rise. As Israel and Hezbollah continue their conflict despite a US-brokered ceasefire agreement, the US and Iran trade tensions despite their ceasefire, sending oil prices soaring and dimming the prospects for a meaningful deal between the countries.

As long as oil prices continue to rise and pump prices here in the US continue to rise, the pressure on the Fed to raise rates to deal with inflation will remain a significant headwind for gold prices.

Current price of gold

The opening price of gold futures on Wednesday was lower compared to Tuesday’s closing price. Here’s how the opening gold price has changed over the past week, month, and year:

• One week ago: +1.8%

• One month ago: -2.5%

• One year ago: +33.5%

This is a modest year-over-year gold price gain of 33.5%, over a year. In context, on Jan. 29, the one-year gold profit was 95.6%.

24/7 gold price tracking: Don’t forget that you can monitor the current price of gold on Yahoo Finance 24 hours a day, seven days a week.

You want to learn more top performing companies in the gold industry? Check out the list of top performing companies in the gold industry using the Yahoo Finance Screener. You can create your own screens with over 150 different test criteria.

Considering an alternative to gold?

If you’re looking for some gold, Yahoo Finance also tracks the daily price of silver (SI=F) and the daily price of bitcoin (BTC-USD) and ethereum (ETH-USD).

Read more: Alternatives to gold? How to invest in silver, platinum, and palladium.

Ways to invest in gold

There are different ways to invest in gold, and each has pros and cons. The four common options are:

1. Virtual gold

2. Gold mining stocks

3. Gold ETFs

4. The future of gold

Virtual gold

Physical gold includes jewelry, gold bars, and gold coins. Some prefer physical gold over other types because it is visible and easy to buy. You can easily buy a gold necklace at the mall or at the gold bars at Costco (COST).

Interested in donating precious metals to Costco? Read more here to learn important precious metal investment considerations, Costco selection details, and tips for managing your new investment.

The pros and cons of physical gold

The tangible benefits of gold include:

1. Easily accessible for use: If you keep your physical gold at home, it is readily available to use as a medium of exchange in an economic emergency.

2. No additional flexibility or ongoing payments: When you own the gold yourself, you “remove someone else’s risk and storage costs or cost estimates,” explains Brett Elliott, director of content and SEO at the American Precious Metals Exchange (APMEX). You also avoid the added business volatility associated with gold mining stocks, as explained below.

Read more: Take a deep dive into the gold sector

Disadvantages of virtual gold include:

1. Risk of theft or loss: Physical gold must be properly protected. You can store it at home for free, or invest in third-party storage and insurance. Remember that fees associated with storage or insurance reduce your returns.

2. Low liquidity: Physical gold is less liquid — that is, harder to sell quickly — than stocks or ETFs. Also, if you don’t use gold as a medium of exchange, you have to find a dealer and pay a markup on the sale.

Read more: How to invest in gold in 4 steps

Gold mining stocks

Gold mining stocks are equity positions for gold miners. They can be volatile because their profits are tied to gold prices, and these companies are more exposed to “country risks and management risks” according to Vince Stanzione, CEO and founder of financial publisher First Knowledge. To manage volatility, many investors choose diversified gold mining funds rather than individual mining stocks.

Gold mines sell good and bad

Advantages of gold mining stocks include:

1. Greater liquidity: Big gold mining stocks like Barrick Gold Corporation (B) and Franco-Nevada Corporation (FNV) typically enjoy a bid-ask spread, which is a sign of liquidity. The bid-ask spread is the difference between what buyers will pay and what sellers will accept.

2. No storage requirements: Shares stay in your brokerage account and don’t take up physical space. In normal times, this is a benefit. In an economic crisis, this can be bad if the traders or the stock market are temporarily closed.

Read more: The most efficient companies in the gold industry

Disadvantages of owning gold mining stocks include:

1. Maximum flexibility: “Gold investment through gold mining companies adds another layer of risk,” explains Thomas Winmill, portfolio manager at mutual fund company Midas Funds. From 2000 to 2020, gold mining stocks rose and fell faster than gold spot prices. In recent years, gold mining stocks have fallen as gold spot prices have gained value.

2. No help as an alternative: Gold mining stocks can be appreciated, but they have no direct utility as a form of exchange.

Read more: Who decides what gold is? How gold prices are determined.

Gold ETFs

Gold ETFs are funds that track the price of gold. They can invest in physical gold stocks, gold mining stocks, gold futures, or a combination of these. The largest gold ETF by total assets is SPDR Gold Shares (GLD), which is backed by physical gold held in vaults.

Gold ETFs pros and cons

Advantages of Gold ETFs include:

1. Keeping it simple: Like gold mining stocks, ETF shares are digital assets with no storage requirements.

2. Greater liquidity: Shares of popular gold ETFs, such as SPDR Gold Shares (GLD) and iShares Gold Trust (IAU), are highly traded. Strong demand makes them easy to sell.

3. Directly tied to gold prices: ETFs backed by physical gold track the spot price of gold, which is generally less volatile than gold mining stocks or gold mining ETFs.

Read more: Gold IRA: Benefits, risks, and how it differs from a traditional IRA

Disadvantages of gold ETFs include:

1. Fees: Funds charge fees, which reduce returns over time. For context, the SPDR Gold Shares expense ratio is 0.40%. This translates to $4 in fees annually for every $1,000 invested.

2. No help as an alternative: Like gold mining stocks, you probably can’t use ETF stocks to trade food in an economic emergency.

The future of gold

Gold futures are standard contracts to buy gold at a future date at a specific price. Contracts usually represent 100 troy ounces. According to Stanzione, among gold investment options, gold futures carry “the greatest risk and are best left to professional traders.”

Read more: Alternatives to gold? How to invest in silver, platinum, and palladium.

The future of gold is good and bad

The advantages of gold futures are:

1. Use: You can control a large amount of gold with a low capital outlay.

2. Eligibility: You don’t need to hold physical gold to benefit from its price changes.

The disadvantages of investing in gold futures are:

1. Risks: Everage maximizes gains and losses. This is always a risk, but especially with an unpredictable asset like gold.

2. Complexity: The complexities of futures contracts can be overwhelming for many retail investors.

Read more: Thinking of buying gold? Here’s what investors should watch.

Gold chart value

Whether you’re tracking the price of gold from last month or last year, the gold-price chart below shows the precious metal’s price journey so far this year.