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

Gold prices in USA and Gold prices in Pakistan have showed a considerable drop in last one week. Currently,gold market is passing through a very difficult time. Gold prices in Pakistan started the week at Rs 50800/tola and ended the week at Rs 50700/tola. Whereas Gold prices in USA started the week at $1,208/ounce and ended the week at $1223/ounce.The international gold prices were mostly affected by the growth of the  US dollar and US interest rates. These factors are discussed in detail below.

US dollar and Gold prices in USA

Gold prices in USA saw a steep decline after a very good recovery in the US dollar index.Currently US dollar index is near to its highest level in last 14 years.It is currently on its highest point since April 2003. The improvement in the dollar came after positive statements by Donald trump.He has gave positive signals about US economy.He is planning to cut taxes on different sectors of economy.He is also planning to boost the infrastructure of the US economy by making fresh investments in the country.

The leading economic index maintained by government has increased by  0.1% in November 2016.It has increased by 0.2% gain in the month of October 2016.

The results of this index is depicting a very good picture of the US economy. Lagging index also showed an increase of 0.2 % in the month of November 2016.After seeing the results of this index,experts are expecting a very good performance of the US economy in the year 2017.The LEI is a measurement of 10 indicators devised to signal valleys (recessions) and business-cycle peaks (expansions).

US interest Rates

Investors are quite certain that Federal reserve is going to increase the interest rates in the next month.Janet Yellen gave a very clear indication of her plans to increase interest rates in next month.Economic experts at renowned newspapers like guardian are quite certain about the rate in December. They are 95 % certain that Fed rate setting committee is going to hike rate sin the next month.After the statement of Janet Yellen,gold prices in USA saw a considerable decline.Gold prices in USA started the day on 1224/ounce and ended the day on 1216/ounce.

 

Economic experts in investment banks like Goldman Sachs are also confident about rate hike next month.They are 90 % confident about the interest rate increase in the next month.

Future Outlook

Market analysts are expecting a downturn in the gold market in upcoming days.They believe that bad days are ahead for the gold market.It is expected that interest rates will be increased in the next month.This will pressurize the Gold prices in USA and Gold prices in Pakistan. So gold investors should buy gold for the short run.They can maximize their investment for the short run.There is a selling advice for the investors for the long run.

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About Emaad Qureshi