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Can gold continue to rally in the face of rising rates? George Cheveley and Hanré Rossouw think so and caution against blindly accepting the received wisdom that rising rates mean falling gold.

Gold: a wealth life raft?

Gold has repeatedly proven its ability to preserve wealth through economic and market crises. Gold has traditionally served as an anchor in investor portfolios whenever they sense financial, economic or monetary danger on the horizon.

Rates rising, gold rising?

The US economy appears robust, led by surveys, and the US Federal Reserve (Fed) is on track to fulfil its dual mandate of full employment and achieving its inflation target. The market expects that the Fed will continue to raise interest rates with consensus expectations of two or three hikes for this year. After falling steadily over the final quarter of 2016, gold has risen in 2017, despite the brief, if substantial, dip in price around the time of the Fed hike in March. This would seem to defy the received wisdom that rising rates result in falling gold prices.

The question is why, and will it continue?

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