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Weekly Review : Gold Prices in USA vs Gold prices in Pakistan

Gold prices in Pakistan have showed  a steep rise in the year 2016.Post-brexit economic scenario and weak economic performance of the emerging economies are two main reasons for this steep rise in the Gold prices in USA and Gold prices in Pakistan  .Gold prices in USA started the year at $1075 per ounce and the current price is at $ 1347 per ounce.This is 25.30 % increase in the gold prices in just 7 months or so.This price increase depicts a high demand of the gold in the international market.

Gold prices in Pakistan started the year at Rs 42000 per tola and now gold prices are touching a very high level of Rs 52900 per tola. Other than the international economic scenario, wedding season in the first quarter of the current year also influenced the gold prices in Pakistan. Wedding season in Pakistan improves the gold demand throughout the country.

Weekly Performance

Gold prices in USA started the week at 1333 per ounce and ended the week 1344 per ounce.The gold prices in Pakistan increased from Rs 52800 per tola to rs 52900 per told during the last week.The weekly performance of the gold prices was mainly influenced by the July job creation figures of the US economy.This job creation has sent negative signals for the gold market and gold inevstors.

Future Outlook

American economy has showed  a considerable improvement in the month of June 2016.The GDP growth rate was also very healthy and the economy is growing at 1.1 % annually as compared to the estimated growth rate of 0.8 %. The US economy added 287000 job in the month of June 2016.Corporate profits are also increasing and they are painting a very bright picture of the overall economy.

The US economy also showed considerable improvement in the month of July 2016 as it added 255000 jobs in the this month.The unemployment rate was at manageable level of 4.9 % for the same month.Overall economy has added approximately 1.3 million jobs in the year 2016.These all signs are creating pressure on the federal reserve to raise the interest rates.This action of the federal reserve will definitely put pressure on the gold prices in USA and they will fall after this interest rate increase.

China is a one of the fastest growing economy and a big importer of gold.Its economy is showing signs of improvement and IMF has also improved its estimations for the Chinese economy.IMF is expecting that Chinese economy will grow at a healthy annual rate of 6.6 % in the current year.The economic performance of the China will certainly affect the Gold prices in USA and Gold prices in Pakistan.

Gold market analysts are expecting that gold prices may fall in next few weeks as federal reserve is planning to increase the interest rates in next two to three months.The decision to increase the interest rates will be mainly influenced by the improvement in the  US economy .So we can say that gold is a good investment option for the short term investors but not a viable option for the long term investors. Investors can improve their short term gains by investing in the gold market.


About Emaad Qureshi