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Gold prices in USA and Gold prices in Pakistan slide after US dollar rise

Gold prices in USA saw a great fall during the last week.Gold prices were at four months low.Gold prices in USA started the week at $ 1313/ounce and ended the week at $ 1248.90/ounce.The strong US economy and increased expectations of interest rate increase is putting pressure on the international Gold prices.

Gold prices in Pakistan were also affected by the fluctuations in the gold prices in USA.Gold prices in Pakistan started the week at Rs 51800/tola and ended at Rs 50500/tola .Following are the two important factors who affected the gold prices in the international market.

US dollar  and gold prices in USA

The dollar has improved its gains against basket of currencies during the last week.The improvement in the dollar value is putting more pressure on the gold prices USA.The Us dollar index started the week at 95.44 and ended the week at 96.65.

Pound sterling is also feeling the heat after increasing anxiety about the future of UK economy in the Post-Brexit economic environment. The losing confidence of  investors in pound sterling is helping US dollar to gain its grounds in the international currency market.

 The decrease in the German bond yields is also helped the US dollar to improve its position in the international currency market.There is a 1.51 % difference between the German  and US government bonds yields.

US economy and gold prices in USA

Strong US economic data put pressure on the gold prices during the last week.They fell to their four month low on Thursday. Now chances of the Fed reserve to increase interest rates in December 2o16 are also increased.According to the data released by the US labor department,the number of US citizens applying for the first time unemployment benefits is currently at four decade low point. This report has also strengthened the belief of average american on the strength of US economy.

Gold prices are currently struggling due to strength of US economy and the fed;s plan to raise the interest rate in the December 2016.

Future Outlook

Gold market analysts are expecting a decrease in  gold prices in USA and gold prices in Pakistan.The rising US dollar ,expected interest rates increase and strengthening of the US economy are three most important reasons for their expectations. US dollar is currently trading at its highest point in last two months.The US dollar index has gained 1.10 % during last one week.It will continue its upward journey in upcoming days as US economy is strengthening its muscles. The stability in the US dollar and US economy will put more pressure on the Gold prices in USA.The news and announcements about upcoming fed interest rates increase is also putting pressure on the gold prices.Now there is 65 % chance that fed will increase rates in its December 2016 meeting.

Gold market is a good investment option in the short run.Gold investors should adopt short selling strategies to maximize their short term gains on their gold investments. If we talk about the long run ,the future of the gold market is very gloomy.

About Emaad Qureshi