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Gold may show a record weekly decline since August

Gold could drop Dwain Ross

Gold has every chance to show a record weekly decline since August against the background of the beginning of the US rate hike cycle, which was given a modest start this Wednesday, March 16.

Some prominent representatives of the Fed are very belligerent. In particular, the president of the Federal Reserve Bank of St. Louis, James Bullard, advocates raising the federal funds rate above 3% this year, while a member of the Fed Board of Governors, Christopher Waller, believes that the regulator should consider raising rates by 0.50% at the next meetings and by July begin to reduce the balance sheet to contain "raging" inflation.

"Precious metals almost do not generate any cash flows, so their attractiveness decreases during periods of rising interest rates," said Oleg Syrovatkin, a leading analyst at the global research department of Otkritie Investments. - "In such circumstances, people may prefer alternative financial instruments, such as bank deposits, bonds or money market funds. However, do not forget that precious metals act as a hedge against inflationary and geopolitical risks, which is clearly seen in the dynamics of gold and silver prices, which rose sharply after the start of the special military operation of the Russian Federation on the territory of Ukraine. It seems that now these precious metals need to "settle down", so consolidation is quite likely in the near future."

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