Gold prices in USA and Gold prices in Pakistan were affected by strong US economy , improved global stock markets and improved US dollar.Gold prices in USA started the week at $ 1301/ounce and ended the week at $ 1284.00/ounce.Gold prices in Pakistan started the week at Rs 53000/tola and ended the week at Rs 51950/ounce.Following are the factors to consider while analyzing the fluctuations in the gold prices in USA and Gold prices in Pakistan.
Strength of US dollar
The US dollar is continuously improving its position in the international market.US president has announced a comprehensive tax reform plan for the American economy. This announcement has really helped improving the US dollar value in the market.
US interest rates Expectation
The gold prices received a severe blow due to increase in the interest rate hike expectations. According to the latest Reuters poll ,70 % of the economists are expecting a rate hike in the December 2017.The high interest rate hike expectations are really affecting the gold demand in the market.The probability of the rate hike has increased from 57.5 % to 70 % in just one month.
Market analysts are expecting a very gloomy outlook for gold in upcoming week.The ever improving value of US dollar,improving global stock markets and improving federal rate hike expectations will affect the gold prices in USA.
The strength of US dollar is making gold expensive for the international investors trading in other currencies.It will decrease the demand of the gold in the near future.The US dollar has recovered its all previous losses on the back of US economic related to the service sector.This data shows that services sector has showed an improvement and it grew with a very encouraging rate in September. This is its fastest rate in last 12 years.
The better than expected data results for the Institute for Supply Management’s index of non-manufacturing activity will really positively affect the stock market performance in upcoming days.It will also increase the chances of fed rate hike .The improvement in stock market performance will decrease the demand of safe haven assets and will also put pressure on the gold prices in USA and gold prices in Pakistan.
The improvement in the interest rate hike expectations is making gold less attractive for the investors. Since higher interest rates makes safe haven assets less appealing to the investors as compared to the bonds and stocks.
The global stock markets are also improving due to improvement in the overall economic outlook.The improvement in the economic outlook will encourage stock traders to invest more in the stock markets. Moreover,the index measuring the global stocks has improved due to signs of strong global economic growth .
Economic experts are expecting that trump administration will fully implement their tax reform plan and that plan will certainly boost the US economy. Since,tax cuts are very positive for the stock market and overall economy. The tax reforms will certainly improve the overall outlook of the US economy.