Gold prices in USA and Gold prices in Pakistan were affected by Federal reserve rate hike and optimism of fed on the US economy .These factors have caused fall in the gold prices per ounce in the last week. Gold prices in USA started the week at $ 1269/ounce and ended the week at $ 1256/ounce.
Gold prices in Pakistan started the week at Rs 50150/tola and ended the week at Rs 50200/ounce.Following are the factors to consider while analyzing the fluctuations in the gold prices in USA and Gold prices in Pakistan.
Federal Reserve Hike
The decision of fed to increase the interest rates last week played an important role in affecting the gold prices in USA and Gold prices in Pakistan.The interest rates increase has created negative sentiment for safe haven assets like gold .
Gold prices in USA have been decreased from $ 1268/ounce to $ 1254/ounce after the interest rates hike.It decreased the demand of safe haven assets like gold in the market.The Federal Reserve has increased interest rates by ¼ points on Wednesday.
The Federal reserve is very hopeful about the performance of the economy at the time of increasing the interest rates.
US economists and Fed are very optimistic about the future of the US economy. The American labor has continued to show good performance and it is quite strengthened since last Fed meeting in May.The economic activity has also picked up in the country in current year.
Job gains during the year are good and unemployment rate has showed a steady decline during the year. All the above mentioned economic indicators have decreased the overall demand of safe haven assets like gold in last few months.
Additionally,Household spending has also improved in last few months and business activity has also improved . The inflation rates has also decreased on a 12-month basis as food and energy prices were below 2 %.
The all above mentioned economic factors have affected the gold demand in the US and international market.The current optimism about the US economy has also decreased the demand of the safe haven assets like gold in the market and has put pressure on the gold prices in USA.
Market analysts are expecting a mixed trend for the gold market in the current week.The interest rate hike and Geo-political tensions are two most factors expected to affect the gold prices in USA in the current week.The senior members of the federal reserve believe that federal reserve has increased the interests rates to facilitate employment growth while maintaining price stability. Federal reserve is quite happy about the strong household spending and business fixed investment along steady job growth in the country. Moreover, Fed is also planning to raise the interest rates by an additional 25 basis points in the remaining months of the year 2017.The future interest rates hike will further push pressure on the gold prices in USA and gold prices in Pakistan.So,it is a bad situation for the long run gold investors.But short investors can improve their gains through using day trading strategies.