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Weekly Review : Gold prices in USA and Gold prices in Pakistan

Gold prices in Pakistan and gold prices in USA have showed a decrease in the current week.The demand of the gold prices has decreased in Pakistani as well as international market.The gold investors are now waiting for the announcement of the fed about the rate hike.The Fed chair Janet Yellen has given signals for the rate hike in upcoming months.Gold prices in USA started the week at $ 1337 per ounce and ended the week at $ 1321 per ounce.Gold prices in Pakistan started the week at Rs 53150 per tola and ended the week at Rs 52150 per tola.

Strong dollar

The value of US dollar  had really improved in the last one week. The price of the US dollar on US dollar index has increased by 0.04 % during the week.It increased from 95.50 points to 95.54 points.As we know that there is a inverse relationship between the dollar value and the gold prices.So the strength of the dollar currency is putting pressure on gold prices in USA. Market analysts are expecting that strong dollar will cause gold prices to slide more in upcoming days.

Rate hike expectations and Gold prices in USA

Janet yellen has hinted about the expected rate hike in her last speech.She is quite happy with the progress of the US economy. She is also quite happy about the low inflation and healthy economic activity.Janet yellen is quite upbeat about the future progress of the economy.The news about the expected rate hike is putting pressure on the gold prices in usa and it is also affecting the gold prices in Pakistan.

Strong performance of US  and UK economy

US economy has showed a very good performance in last two to three months.The consumer spending has shown a very healthy rate of 4.4 % in last three months.It was 1.6 % in the first quarter of the current year.

UK economy is  recovering from the aftershocks of the Brexit referendum. The strong growth of UK economy is mostly influenced by the improvement in consumer spending.The consumer spending in the three month span from April to June showed a 0.9 % growth as compared to the last quarter.It is fastest pace since the year 2014.The business investment also grew by 0.5 % in the current quarter.Market analysts believe that recovery in the economy will certainly decrease the demand of gold in the market.

Future Outlook

The healthy growth of the US economy,rate hike expectations and strong dollar are three factors affecting the gold prices in USA and gold prices in Pakistan in last week.These three factors will keep on affecting the  gold prices in next few weeks.

Market analysts are expecting a sharp decline in the gold price after rate hike by the federal reserve. Gold investors must keep a close eye on the rate hike announcements and the related news.So short term gold investors should immediately sell their gold investments to get maximum benefits from their investments. The long term economic outlook of US economy is very positive and it will put more and gold prices in Pakistan pressure on the gold prices in USA.This pressure will further decrease the demand and investment potential of the gold in the international market.

 

 

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About Emaad Qureshi