Gold is one of the most important investment options for investors. 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 $ 1292/ounce and ended the week at $ 1289/ounce.Gold prices in Pakistan started the week at Rs 51200/tola and ended the week at Rs 50950/ounce.Following are the factors to consider while studying the fluctuation in the gold prices in USA and Gold prices in Pakistan:
North Korea and USA tensions are increasing with every passing day.These tensions have created Geo-political instability in the Asian region. These tensions have also improved the demand of the safe haven assets like gold.Gold prices in USA have kept their steady position throughout the last week.French elections had also created some uncertainty and that really helped in improving the demand of the gold in the international market.
US dollar Value
US dollar lost its value during the week and it really helped the gold prices in USA and gold prices in Pakistan. The improvement in the value of Euro and french elections uncertainty has affected the performance of the US dollar. The US dollar index started the week at 100.41 points and ended the week at 99.88 points.
Market analysts are expecting very volatile days for the gold market in current week. Official Brexit talks between EU and UK can create complications as both parties are planning to stay firm on their current positions.EU has already made some demands to the UK government about financial services limits and residency rights. These types of events can create political uncertainty in upcoming weeks.This uncertainty can increase demand of the safe haven assets like Gold. This situation certainly will increase the gold prices in USA and gold prices in Pakistan.
Trump has just announced his much hyped tax reforms for the American economy.This is one of most comprehensive tax reform plans in the US history.Trump administration is planning to fix 15 % corporate tax rate for the companies.Moreover,this tax reform is also offering huge relief for the small and medium businesses. The details of the tax reforms are yet to come but it is generally believed that it will benefit the US economy. So,it is expected that US dollar value will improve after the implementation of the tax reforms plan.This situation certainly will decrease the gold prices in USA and gold prices in Pakistan.
Gold market can come under extreme selling pressure due to renewed optimism after the announcement of tax reforms by the trump administration. However ,Geo-political instability can create window of opportunity for the yellow metal in the current week.So,short run investors can improve their returns by selling their investments through using day trading strategies.Long run investors can wait for the Brexit negotiations or more uncertain political events.As,these events will certainly increase demand for the safe haven assets like Gold.