Here’s what you need to know, especially if you’re in or nearing retirement.
How gold reacts to Fed cuts
The central bank’s rate cuts can weaken confidence in the U.S. dollar. When that happens — and especially if inflation is expected to rise, which can happen when rate cuts stimulate the economy — investors often turn to gold as a safe haven. As a result, gold’s price can rise.
Gold enjoyed a strong rally in 2025 that coincided with multiple rate cuts. While other assets such as stocks also rallied, gold outperformed many of them by gaining more than 65% for the year. However, past performance doesn’t guarantee future returns and no one can say exactly how gold would react to interest rate cuts.
Timing risks for retirees
Retirees shouldn’t use investing strategies that rely on correct timing. There’s a risk that gold’s price drops after you invest in the precious metal, and a shorter time horizon means your portfolio has less time to recover from downturns.
Dollar-cost averaging, which is a strategy that entails investing a regular amount of money at set intervals, is a method experts tend to recommend. It helps ensure you won’t invest based on your emotions, and lets investors ride the rallies and get more for their money during price dips.
How much to invest in gold
Many experts recommend allocating no more than 5-10% of a portfolio to gold. This allows investors to get some diversification — reducing their exposure to the stock market — while still getting the advantages of stocks, bonds and other assets.
Investors can buy physical gold, such as coins and bullion. Physical assets may give you more control, since you can keep them in your home or in a safe place like the bank, but they are more complicated to obtain, store and sell if needed. Plus, there are potential insurance and storage fees.
Investors can more simply get exposure to gold with an exchange-traded fund (ETF). Some ETFs directly track the price of gold, while others offer exposure to gold mining companies.
How to strategically accumulate gold
For most investors, the Fed’s rate decisions shouldn’t determine whether you buy gold or not. That decision should come down to your goals, risk tolerance and time horizon.
A small allocation of gold can act as a hedge against inflation and economic uncertainty, which means having some in your portfolio can be advantageous whether the Fed cuts rates or not.