Gold is one of the most favorite investment options for the investors. However,nowadays gold is passing through a bad patch due to numerous reasons.Gold prices in USA and Gold prices in Pakistan are affected by Political uncertainty,Geo-political instability and falling dollar has created numerous opportunities for the gold investors in last week. Gold prices in USA started the week at $ 1269/ounce and ended the week at $ 1226/ounce.Gold prices in Pakistan started the week at Rs 50750/tola and ended the week at Rs 50400/ounce.Following are the factors to consider while studying the fluctuation in the gold prices in USA and Gold prices in Pakistan
French election and Gold prices in USA
French election has played a very important role in affecting the gold prices in last one week.French presidential election took place between centrist Macron and populist Le Pen.Macron is a supporter of EU and low corporate taxes.So his election has created a sigh of relief in the minds of investors as his policies will stabilize the French economy. However, Le Pen was planning to conduct a Brexit like referendum in France.But election of Macron has decreased the demand of safe haven assets like gold in the international market and gold prices have plunged in the international market.
Brexit and UK elections
British Prime Minister Thersa May has made a clever move to announce an early election.The main objective of her move is to place her party in strong position before the final negotiations with the European Union.She has triggered Article 50 to start the formal process of Brexit in March 2017.The Brexit process is gradual and it is favoring the safe haven assets like gold in the international market.
US economic Data and Gold prices in USA
Hiring increased in April, and the unemployment rate fell to its lowest level in a decade, signs the U.S. economy is rebounding after a lackluster winter.
Market analysts are expecting a negative week for the gold prices in USA in the current week.After the strong April jobs report, economists like Gregg Robb of market watch believe that it is almost confirmed that Federal Reserve will increase the interest rates again in June.The senior economists at the Northern Trust also share the same view about the June interest rate hike.They believe that economic expansion and good performance of the labor market justify this view.The interest rate hike will put more pressure on the gold prices in USA and gold prices in Pakistan.And this is a very discouraging sign for the gold investors.
In April,job market hired approx 211,000 people and this is increase from the figure of 79,000 in March. The unemployment rate also showed a slide of 4.4% and this is the lowest rate since May 2007.The unemployment rate in the country is lowest in last one decade as economy is showing improvement slow winter.
The good economic conditions and European political stability is depicting a bad outlook for the gold market.Investors can earn short run gains through using their day trading strategies.