Gold prices in USA and Gold prices in Pakistan closed flat on technical ground. The Gold prices in Pakistan started the week at Rs 51500/tola and ended the week at Rs 51600/tola. Whereas Gold prices in USA started the week at $1,263.63/ounce and ended up at $1,275/ounce. This slight increase in gold prices shows that there was not a huge variation in the prices of gold. Since early October, the gold price has lost a significant amount of steam, dropping well below its post-Brexit price of $1,365.40 per ounce back in July.
There are many factors that affect the gold prices in USA and Gold prices in Pakistan which are as follow.
Federal Reserve’s Decision and gold prices in USA.
The monetary policy of the Federal Reserve is one of the most important reasons affecting the gold prices in USA. The US Federal Reserve’s changed the interest rates last December. The US economy has showed a very good performance in last quarter. The US economy grew by 2.9 % in the 3rd quarter of the year 2016.economic experts were growth rate of 2.5 % for third quarter. The encouraging data related to the US economy dragged gold prices to 1262 $ level on Friday. These economic figures have increased the chances of US Federal Reserve to increase the interest rates in December 2016.
Supply and demand.
Another important factor that affects gold prices in USA and Gold prices in Pakistan is supply and demand factor. According to the world gold council, gold demand during the second half of 2016 grew 15% to 2,335 tons and it is still increasing in the fourth quarter of the year 2016. The most important reason for increasing gold demand is the festive season in Asian countries like India and Pakistan.
The US dollar index lost its value from 98.68 to 98.34 during the week and that affected the gold prices in USA.
Festival related events in the Asian countries like, marriage seasons and Diwali will play a major role in affecting the Gold prices in USA and Gold prices in Pakistan. According to local jewelers in India and Pakistan, More than 50% of jewelry is bought for weddings. This is the reasons demand and gold prices increase rapidly in wedding seasons. So it is expected that gold prices will increase in the upcoming weeks. Economic uncertainty is another major factor that can affect the gold prices in USA. The current political situation in United States is not stable as elections are just around the corner.
Market analysts are expecting an increase in gold prices in the short run. Gold investors can maximize their short term gains by investing in the gold. Long term investors should wait for the US elections and expected Federal Reserve interest rates hike in December 2016. These two mentioned events will define the future direction of the gold prices in USA and Gold prices in Pakistan.