Gold investors have showed a little interest in the precious metals last week.Gold prices in USA started the week at $ 1234/ounce and ended the week at $ 1200/ounce.Gold prices in Pakistan are also following the pattern set by the international factors.Gold prices in Pakistan started the week at Rs 50950/tola and ended the week at Rs 50050/tola. Following are the most important factors affecting the gold prices in Pakistan and gold prices in USA .These factors impacted the gold prices in great way.
US Job growth figures
The US labor figures for the month of February have proved that US economy is on the right track.Last week Labor Department reported a healthy wage growth and gain of 235,000 jobs in the past month. This data was released just before federal reserve meeting and it increased he possibility of the rate hike.
Federal Reserve Interest Rates
Federal reserve is expected to increase the interest rates in its upcoming meeting. This upcoming event is badly affecting the gold demand in US and international markets.Gold fell below the psychological mark of $ 1200/ounce on Friday, after increased expectations of fed hike expectations. Gold appeared less attractive to the investors last week as increase in interest rates can affect its yield.
Political Uncertainty in Europe
United Kingdom government is ready to start the formal process of Brexit . Brexit process will increase the political uncertainty in the Europe.The Brexit also affected the gold prices in USA last week. The upcoming Netherlands elections also created some uncertainty as populists win can really start Brexit like movement in Netherlands. The Dutch elections will cleanly test the support for far-right populists in the Holland.
Market analysts are expecting a huge pressure on the gold prices in upcoming days.The dutch election, Brexit and interest rate hike are three most important factors affecting the gold prices in the international market .Geert Wilders is the dutch populist and anti-Islam leader.His win in the upcoming election can create enormous amount of uncertainty in the region.So,political uncertainty will increase the demand of the safe haven assets like gold as potentially destabilizing political events affect the demand of risk assets like equities.
The recent US economic indicators are painting a very good picture of the US economy. Economic experts claim that Donald Trump election has increased believe of investors in the US economy. A good US economy is very bad for the safe haven assets,so it will put more pressure on the gold prices in USA and Gold prices in Pakistan.
Market analysts believe that winning of Geert Wilders can create temporary demand for the safe haven assets like Gold.So,gold investors can earn some bucks in the short run as political uncertainty will create opportunities for them.They can increase return on their investments through using day trading strategies.But US interest rate hike will affect the gold market in the long run as it will make gold less attractive for the investors. So,this means gold is not a good investment for the investors in the long run.