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After a strong start to the year, gold prices will drift lower in 2022 and 2023 as central banks raise interest rates, lifting bond yields and making non-yielding bullion less attractive, a Reuters poll showed.

Gold is traditionally seen as a safe place to invest and typically does well during times of low or zero interest rates.

It hit a record high of $2,072.50 an ounce in 2020 when interest rates were cut during the coronavirus pandemic, but fell as economic growth recovered, stock markets rallied and central banks began to signal rate rises.

Gold traded around $1,800 an ounce on Thursday.

The median forecast from a poll of 39 analysts and traders showed the metal is expected to average $1,802.50 an ounce during the January-March quarter, $1,770 in the second quarter, $1,775.50 for the full year and $1,653 for 2023.

A similar poll three months ago predicted prices would average $1,800 in the first quarter and $1,750 for the full 2022 year.

In 2021, gold prices averaged $1,799 an ounce.

“U.S. real rates (inflation-adjusted yields on government bonds) should turn positive by the end of 2022 and see gold’s Goldilocks moment passing,” said Societe Generale analyst Florent Pele.

Real U.S. yields have been negative since the start of 2020.

Some analysts said strong demand for physical gold, including from central banks building their reserves, would support prices.

High inflation could also help gold because although it encourages central banks to raise interest rates, some investors see gold as an inflation hedge.

For silver, prices are expected to average $22.96 an ounce this year and $21.80 in 2023, the poll found.

Silver averaged $25.12 last year. It is currently trading at around $23 an ounce.

The metal is used both as a safe-haven asset similar to gold and by manufacturers of goods including solar panels, automobiles and electronics.

“Pent-up auto demand and growth in the solar sector should set a solid floor for silver prices,” said Standard Chartered analyst Suki Cooper. “Yet silver is likely to face the same macro headwinds as gold.”

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