Precious metals like gold are losing their charm .Gold prices in USA started the week at $ 1135/ounce and ended the week at $ 1150/ounce.Gold prices in Pakistan are also following the pattern set by the international factors.Gold prices in Pakistan started the week at Rs 49850/tola and ended the week at Rs 50000/tola. Following are the most important factors affecting the gold prices in Pakistan and gold prices in USA .
Gold prices in USA and US Dollar
Gold prices in USA touched its highest point in last two weeks.The main reason was slide in the dollar value.US Dollar lost its value by 0.75 % during the week.US dollar index started the week at 103. 06 points and ended the week at 102.29 points.The decrease in US dollar value can be attributed to the US trade data release.This data showed increase in the US trade deficit for the month of November 2016.This is the largest increase in last one year.
Economic uncertainty in Europe
The Brexit is still haunting the European and British economy.UK government had to increase tax rates to finance its budget.This move will increase uncertainty and panic in the businessmen and investors.This has really increased the demand of safe haven assets like gold in the European countries such as UK.
Increase in Chinese and Indian Demand
The gold demand in India and China has seen a considerable increase.It has helped Gold prices in Pakistan and Gold prices in USA to increase in last week.
Gold market analysts are expecting mixed trends in the market this week.Gold market investors are very cautious while investing in the gold market.They are eager to see the real affect of the announced policies of the Donald Trump.Donald trump will take oath as President of US on 20th January 2017.His policies can improve economic positioning of the USA.Improvement in the US economy will create more pressure on the Gold prices in USA.
Presidential and general elections will be held in different European countries in first half of 2017. There is a very good chance of populist parties to win these elections.These populist parties have intentions to hold Brexit like referendum in their respective countries.The results of these referendums can create political and economic uncertainty in the Europe. This economic and political uncertainty will increase demand for safe haven assets like Gold.
World gold council has recently released a report about the Chinese gold demand.This report has analyzed different factors responsible for the increasing gold demand in the China.The consumer friendly policies of the country is causing increase in gold demand. The private sector in China is creating the real demand in the country. The private sector demand is expected to grow by 20% in the year 2017.It is also expected that current Chinese demand will increase from 1132 tonnes per year to 1350 per year by the end of 2017.
After analyzing the above mentioned factors, it can be concluded that Gold i s a very good investment option for the short run.Investors can easily maximize their returns by using day trading strategies.The Gold prices in USA are expected to move around $ 1100/ounce- $ 1200/ounce level in next week.