Gold prices in USA and Gold prices in Pakistan were affected by Geo political tensions and US economic data release in the last week .Gold prices in USA started the week at $ 1296.40/ounce and ended the week at $ 1291.60/ounce.Gold prices in Pakistan started the week at Rs 50750/tola and ended the week at Rs 51294/ounce.Following are the factors to consider while analyzing the fluctuations in the gold prices in USA and Gold prices in Pakistan.
Federal Reserve and Interest Rate hike
The Federal Reserve policymakers are divided on the issue of future interest rate hikes.Since,they are not sure about the future direction of the US economy.They are expecting a slowdown in the economy and inflation. Some participants in the last meeting of the Fed believed that interest rate should not changed soon.They showed their concerns about the inflation slowdown. This confusion about the interest rate policy has helped increase the demand of safe haven assets like Gold.It helped gold prices in USA to move upwards in the last week.
US economy issues
Gold prices in USA gained a good ground on the back of downbeat U.S. housing sector data released on last Wednesday. This badly affected the demand US dollar in the international currency market.However,gold prices in USA suffered a hit after the strong data on U.S. retail sales and manufacturing activity .After the release gold the data gold prices suffered their highest one day drop in last six weks.
Market analysts are expecting a mixed trend for the gold market in the current week.The geo political instability,and interest rate hike decisions are two most important factors affecting the gold market in the current week.
The debate of the interest rate hike has created confusion in the minds of the stock and gold investors.Since,there was clear divide between various fed members about rate hike in July 2017 meeting.It is highly expected that interest rate may be increased in the upcoming federal reserve meeting.The increase in the interest rates will put pressure on the gold prices in USA.Since,increase in the interest rates decreases the assets like gold.
The political situation between North Korea and USA still not eased.The ongoing war games between USA and South Korea are really angering North Korea.Since,North Korea is taking these war games serious.North Korean leaders are terming them a rehearsal of the upcoming war between both countries.This fluid situation is creating opportunity for gold investors to earn some return on their investments.Since,political uncertainty always increases the demand and prices of safe haven assets like gold. Therefore,gold prices in Pakistan and gold prices in USA may increase in the current week due to political tussles between North Korea and USA.
The market analysts at Money and Matters are expecting a strong resistance at $ 1300/ounce level. Therefore,it is highly advised that gold investors should use day trading strategies to earn some easy bucks.Since,long term outlook of the gold market is grim.So,in this situation only day trading strategies will help investors to recover their investments by using daily fluctuations in the gold prices .