Gold prices have been decreasing gradually in Pakistan since a few months, with a few exceptions of increases; the general gradient of gold prices is going down. Investors are now doubting gold as a potential investment, as international analysts are also not optimistic about its recovery. If you are wondering what exactly caused this gold phenomenon, here are some theories.
The US dollar was seen to trade a 14 month high on track for its nine week of profit in a row. This made the dollar stronger, which implied that a stronger dollar weighs on gold as it’s, is priced in dollars. The value of gold will decrease with an increase in the value of gold. Hence it will take a few dollars to buy gold. Secondly, in July Fed Chairwoman Janet Yellen stated that ‘interest rate increases may come sooner and be more rapid than currently envisioned’. Last month the Federal Open Market Committee revealed that the central bank may raise its rates if the economy continues to strengthen.
This was just a speculation, but it affected the gold market in a bad way as it caused the dollar to rise and higher interest rates lead to lower gold rates. The fed is looking to cut its monthly bond buying program by $10 billion and will decide whether to raise interest rates or not. This final decision will take place in its upcoming meeting and investors have their eyes pinned on this meeting.
These speculations have defined the international rate of gold which has in turn affected the gold prices of Pakistan as well.