Gold prices in USA and Gold prices in Pakistan were affected by Geo political tensions and US economic progress in the last week .Gold prices in USA started the week at $ 1264.30/ounce and ended the week at $ 1294/ounce.Gold prices in Pakistan started the week at Rs 50000/tola and ended the week at Rs 50750/ounce.Following are the factors to consider while analyzing the fluctuations in the gold prices in USA and Gold prices in Pakistan.
US -North Korea Tension
Gold prices in USA climbed after increase in the tensions between the US and North Korea last week.Gold prices in USA reached at 2 month high during the last week.The geopolitical tensions increased the demand of the safe haven assets like Gold and pushed the prices upwards.North Korea even gave nuclear war threats to the USA.In return,Donald Trump also told North Korea that it will reply with full force.Defense Secretary Jim Mattis also told Pyongyang that tussle with USA can bring an end to its regime and can also bring destruction of its people.Threats of the nuclear war escalated the demand of the Gold and gold prices in USA rose by 2.37 % during the week.
Market analysts are expecting a mixed trend for the gold market in the current week.Gold prices may fall more as North Korea has postponed its plans to attack USA.The delay in the North Korean plan has certainly eased the tensions between the North Korea and USA. Previously, North Korea had announced to attack U.S. pacific territory of Guam by using its missiles.The easing in the tensions will certainly reduce the demand of safe haven assets and it will put further pressure on the Gold prices in USA and Gold prices in Pakistan.
US economy is another important factor which will affect the short term prospects of the international gold market. The better-than-expected July U.S. retail sales data has increased the expectations of investors and economic experts about the performance of the US economy. It is expected that US economy will show better performance in the third quarter of the current financial year.The improved economic data will send negative signals for the gold market and it will decrease the demand of the gold in the international market.The good economic growth will also improve the bond yields in the United states of America.This will further put pressure on the gold prices in USA and gold prices in Pakistan. Moreover,strong economy will also improve the position of the US dollar in the market.We all know that US dollar value is inversely proportional to the gold prices in USA.
Market analysts are also expecting another interest rate hike in the current year.The expected interest rate hike will further damage the long run prospects of the international gold market.Furthermore ,it will also negatively affect the gold prices in international market.
The short run and long run outlook of the gold market is not so encouraging.The short run investors can earn some returns by taking advantage of short term gold price fluctuations.