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Weekly Review : Gold prices in Pakistan and Gold prices in USA

Gold prices in USA and Gold prices in Pakistan saw a volatile week.Gold prices in USA started the week at $ 1322.90 per ounce and ended the week at $ 1326 per ounce.It is 0.30 % increase in the prices as compared to the last week.Gold prices in Pakistan started the week at Rs 52000 per tola and ended the week at Rs 50800 per tola.It is 2.30 % decrease in the price as compared to the last week. There are lots of factors affecting the international gold prices. Following are the most important factors  who affected the gold prices in last week.

Weak US Manufacturing data

Gold prices in USA greatly improved after the release of the US manufacturing data for the month of August 2016.According to the report released by the The Institute for Supply Management,  U.S. manufacturing fell in the month of August 2016 as factories cut their jobs and number of orders started dropping. Gold prices in USA rose from $ 1306 to  $ 1322 after the release of the manufacturing data.The ISM index points  showed drop from 52.6 in July 2016  to 49.4 in August 2016 .Gold prices in Pakistan also made  a comeback after the release of the US manufacturing data.Gold prices in Pakistan increased from Rs 50800 per tola to Rs 52938 per tola after the data release in the media.

Interest Rates Rise Announcements

Federal reserve chair Janet Yellen has numerous times hinted about her future decision to increase the interest rates.US manufacturing data results can affect his future plans related to interest rates hike.Experts such as Brad Bechtel of the Jefferies Group are still quite hopeful about the plans of the Federal reserve to raise interest rates this year.They believe that these types of news will not affect the long term plans of the federal reserve to raise interest rates.But Brad Bechtel do believe that somehow this data raises some concerns about the overall US economy.

Performance of the US dollar

US dollar showed a considerable strength in the current week on the basis of strong US economic indicators.But it lost its value a bit after the release of weak manufacturing data of the US economy. Gold prices in Pakistan and Gold prices in USA rose after the weakening of the dollar. The US dollar index lost 0.17 points after the US data release by the Institute of supply management.

Future Outlook

All eyes are on the US job data for the month of August 2016.A strong job data will put more pressure on the gold prices in USA as it will increase chances of interest rate increase in one or two months.The weak job data will delay the rate increase decision by the Federal reserve and it will give some stability to the Gold prices.Other than that currency devaluation of other countries such as Japan can also influence the gold prices in the international market.The devaluation of yen can encourage investors to buy more gold to hedge their future risks.

It is suggested that short term gold investors should sell their investments before the release of the US job data as strong job data is expected.Strong data will decrease the gold prices in USA.Long term investors can adopt buy and hold investing strategy for their investments.


About Emaad Qureshi