Gold investors have showed a little interest in the precious metals last week.Gold prices in USA started the week at $ 1237/ounce and ended the week at $ 1256/ounce.Gold prices in Pakistan are also following the pattern set by the international factors.Gold prices in Pakistan started the week at Rs 50700/tola and ended the week at Rs 50900/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.
Euro zone is passing through its most critical and decisive point of time. Three most important countries of Euro zone namely Netherlands, France, and Germany are planning to hold elections this year.The populist parties in these countries are pushing for Brexit like referendum and this all depends upon the election results in these countries.These political movements in Euro zone have created political and economic uncertainty and this uncertainty increased the demand of safe haven assets like Gold. These types of economic and political factors helped gold prices in USA to rise in last week.
The political uncertainty in the Pakistan has helped gold prices in Pakistan to rise .Investors are keenly waiting for the Panama case decision. It is expected that court will announce its verdict in the month of March 2017.
US dollar showed strength
US Dollar has showed some strength in last week.It gained some strength as investors are now expecting a rate hike in march 2017.A Federal Reserve official believes that markets could expect an interest-rate increase at the Federal reserve’s March meeting.This rate hike will certainly push more pressure on the gold prices in USA and Gold prices in Pakistan.The US dollar index started the week at 100.86 points and ended the week at 101.09.
Market analysts are expecting a mixed sentiment for the gold market in this week.US economy is facing uncertainty due to unclear economic policy of the trump administration. American businessmen and economists are still confused about the upcoming economic plan of the Donald trump.Federal reserve is also keeping a close eye on the Trump and US economy as it is planning to raise interest rates in the March 2017.So this means that right now future of the gold market somehow depends on the tax and economic reforms of the trump administration.
The populist movements in the Euro zone are also creating uncertainty in the world economy. Moreover, Brexit like referendums in these countries can increase the uncertainty and demand of safe haven assets in the long run.The performance of US economy is also very important as IMF predicted that it will grow by 2.5 % in the year 2018.Therefore ,long run investors should adopt buy and hold investing strategy and wait for the right time to sell their assets.
The short run investors can maximize their returns by using the daily and weekly fluctuations in the gold prices in USA and gold prices in Pakistan.They should use day trading strtegies to maximize their gains from their investments.