Gold investors have showed a little interest in the precious metal last week.Gold prices in USA started the week at $ 1151/ounce and ended the week at $ 1171/ounce.Gold prices in Pakistan are also following the pattern set by the international factors.Gold prices in Pakistan started the week at Rs 49900/tola and ended the week at Rs 50100/tola. Following are the most important factors affecting the gold prices in Pakistan and gold prices in USA .These factors have really affected the gold demand in during the last week.
The Chinese demand has shown a very positive trend in last one week.The Chinese demand has showed an upward trend after the start of the Chinese new year.This New year event always increases gold demand and increases the gold prices in USA.The gold prices even touched $ 1185/ounce on Thursday due to the strong Chinese demand.
Federal Reserve Rate Hike expectations
Federal reserve rate hike expectations are really creating doubts in the minds of gold investors.Donald trump has promised to provide economic package to the US economy.This economic package will include deregulation,tax cuts and increased infrastructure spending.This economic package will increase economic activity and inflation in the country.The increase in inflation will force Fed to increase interest rates again. Interest rate increase will further pressurize gold prices in USA and Gold prices in Pakistan.
Weak US dollar
The US dollar value has showed a slide last week.This weakness has helped gold price in USA to get some upward momentum during the week.The US dollar index opened the week at 102.81 points and ended the week at 102.21 points.This is 0.583 % drop in the value of the US dollar during the last week.
US President Inauguration
The US president inauguration is creating little bit of political and economic uncertainty.This uncertainty has created small amount of safe haven buying demand.This safe haven demand has improved the gold prices in USA during the week.
Market analysts are expecting a mixed for the gold market.gold prices in USA may rise on the back of Chinese demand. Gold prices will find a strong resistance due to strong dollar and confused gold market investors. Market analysts are expecting the gold prices in USA to hover between $1,190 – $1,200. Investors must keep an close eye on the gold behavior between $1,190 – $1,200 resistance level.
The expected inauguration of the Donald trump is still playing in the minds of the investors this week.They are expecting a strong economic package from him. His policies can create great demand for the economy.Strong US economy is a bad news for the gold prices in Pakistan and Gold prices in USA.Strong US economy will also force Federal reserve to increase interest rates in near future.
After analyzing the above mentioned factors,it can be concluded that gold prices will remain below the $ 1200/ounce level in the week.Investors can easily maximize their returns by buy gold for the short run and then selling it.Investors can maximize their investment returns by using day trading strategies in the gold market.