Gold suddenly suffered a sharp fall! Gold prices fall short-term more than $10! Now approaching the 1770 mark! Dollar rebound hits gold bulls!

Monday (April 19) sub-market intraday, spot gold in close to $1785 / ounce after a sudden short – term sharp fall. The price of gold, which had rallied on news of Chinese imports, fell sharply from the session’s high as the dollar resumed its rally and is now trading near $1,770 an ounce.

Financial website FXStreet analyst Anil Panchal wrote on Monday that news over the weekend of China’s gold import push was good for gold buyers. Reuters reports that China has allowed domestic and international banks to import large amounts of gold. That could help gold find support after a months-long decline.

Gold rose sharply on the news, reaching as high as $1,783.64 an ounce.

China is the world’s largest gold consumer, consuming hundreds of tons of gold worth tens of billions of dollars a year, but its imports have plummeted as the coronavirus has spread and domestic demand has dried up. As China’s economy has rebounded strongly since the second half of last year, demand for gold jewellery, bars and coins has recovered, pushing domestic gold prices above global benchmark interest rates and making it profitable to import gold.

In recent weeks, the Chinese government has allowed large amounts of the precious metal to enter the gold market, Reuters reported, citing sources. At current prices, about 150 tonnes of gold, worth $8.5 billion, could be shipped, four of the sources said. Two of the sources said the gold would be shipped in April. It will arrive in China in April and May, two other people said.

Separately, Indian demand for gold has rebounded from a pandemic-induced slump, with imports reaching a record 160 tonnes in March, an Indian government source told Reuters this month.

It’s worth noting that India and China are the world’s largest consumers of gold, and hints of increased buying by key gold buyers should help lift the metal, Panchal said.

However, news of China’s gold import push hasn’t provided a sustained boost to prices. The rebound of the dollar has become a further rise in gold prices.

The dollar index rallied nearly 20 points in the short term, touching as high as 91.74. Gold fell sharply from the day’s high, touching as low as $1,772.92 an ounce.

According to foreign media reports, US President Joe Biden is considering a compromise on raising the top corporate tax rate from the current 21 percent to 25 percent, instead of the previously envisaged 28 percent.

Analysts said the news contained the prospect of a dollar devaluation triggered by capital outflows from a big U.S. tax increase that investors feared, and better paved the way for the next round of fiscal easing.

The dollar index ended the week at 91.54, down 0.5 percent for the week and extending a 0.9 percent decline the previous week. The dollar took a beating as investors agreed with the Fed’s repeated pledge not to tighten monetary policy because of a temporary rise in inflation, and Treasury yields continued to fall.

Analysts pointed out that from this trading day, the dollar index will still be an important factor driving gold prices. If the dollar weakens again, gold still has room to rebound.

Some market participants expect the dollar’s weakness to continue. “My best guess is that there won’t be much change in the 10-year Treasury in the coming quarter, which sets the stage for the recent trend we’ve seen, with the dollar weakening for most of the quarter,” said Colin Asher, senior analyst at Mizuho Securities.

However, Paul Meggyesi, an analyst at J.P. Morgan, said the dollar’s decline in tandem with Treasury yields this quarter was a countertrend correction that should prove temporary.

Analysts are bearish on the outlook for the dollar this week, according to the FX168 weekly survey of financial markets on Saturday. Of those surveyed, 71.4 percent expect the dollar index to fall this week, while 28.6 percent expect the dollar index to fluctuate.

From a technical point of view, the downtrend line since early March is at $1,786 / oz, which could constitute short-term resistance, with higher resistance at $1,800 / oz, said Anil Panchal, analyst at FXStreet.

From below, gold is at risk of a further pullback in the event of a clear break below the 50-day moving average of $1,750 / oz.

The dollar index ended the week at 91.54, down 0.5 percent for the week and extending a 0.9 percent decline the previous week. The dollar took a beating as investors agreed with the Fed’s repeated pledge not to tighten monetary policy because of a temporary rise in inflation, and Treasury yields continued to fall.

Analysts pointed out that from this trading day, the dollar index will still be an important factor driving gold prices. If the dollar weakens again, gold still has room to rebound.

Some market participants expect the dollar’s weakness to continue. “My best guess is that there won’t be much change in the 10-year Treasury in the coming quarter, which sets the stage for the recent trend we’ve seen, with the dollar weakening for most of the quarter,” said Colin Asher, senior analyst at Mizuho Securities.

However, Paul Meggyesi, an analyst at J.P. Morgan, said the dollar’s decline in tandem with Treasury yields this quarter was a countertrend correction that should prove temporary.

Analysts are bearish on the outlook for the dollar this week, according to the FX168 weekly survey of financial markets on Saturday. Of those surveyed, 71.4 percent expect the dollar index to fall this week, while 28.6 percent expect the dollar index to fluctuate.

From a technical point of view, the downtrend line since early March is at $1,786 / oz, which could constitute short-term resistance, with higher resistance at $1,800 / oz, said Anil Panchal, analyst at FXStreet.

From below, gold is at risk of a further pullback in the event of a clear break below the 50-day moving average of $1,750 / oz.

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