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Gold flirts with bear market as more Fed hikes loom

Spot gold is edging lower ahead of the weekend, as markets continue digesting the prospects of US interest rates staying at a higher-than-expected peak for longer.

In anticipation of this week’s Fed rate hike, gold had already shifted lower since last week. Although the precious metal has since adhered mostly to the $1660-$1680 crucial range, intraday prices have been dipping in and out of a “bear market”, which is marked by a 20% drop from its March peak.

Gold flirts with bear market as more Fed hikes loom

The red-hot US dollar along with rising US yields have done enough to erode gold’s stature as an inflation hedge and as a safe haven asset, despite the rising prospects of a global recession amid the recent escalation in the Russia-Ukraine conflict.

Ultimately, gold’s upside remains strongly capped amid the Fed’s ongoing aggressive rate-hike cycle, which has left bullion bulls cowering in the interim.

 

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