Gold Price News: Gold Strength Returns on Weaker Dollar, Chinese Imports

Gold prices powered higher on Tuesday on the back of US dollar weakness and following reports that China’s gold imports surged to an 11-month high in April.

Prices rose as high as $3,286 an ounce on Tuesday, up about 1.8% from around $3,227 an ounce in late trades on Monday.

The US dollar fell against other major currencies on Monday and failed to recoup the losses on Tuesday. A weaker dollar tends to drive dollar-denominated gold prices higher due to their inverse correlation.

China’s gold imports surge in April

Adding to the strength for the yellow metal, China’s gold imports reached an 11-month high in April, according to news reports on Monday. The reports cited Chinese customs data, which showed that the country’s gold imports rose to 127.5 metric tonnes in April, up 73% from March levels. The increase came despite the price hitting an all-time high of over $3,500 an ounce in April.

The rise in imports appears to reflect the People’s Bank of China loosening import quotas for some commercial banks in April, amid strong demand for safe-haven assets due to uncertainties over the US-led trade war and ongoing geopolitical tensions between Israel and Gaza and Russia and Ukraine.

The perception of a high-risk environment was only exacerbated by ratings agency Moody’s, which has officially downgraded America’s credit rating, citing unsustainable national debt levels. This means for the first time in history, all three major ratings agencies have cut their US sovereign rating below their top level. A diminished credit rating for the US raises interest in other perceived safe-haven assets such as gold.

Upcoming data

Looking ahead, Wednesday is looking light on market data, while Thursday will bring a flurry of monthly manufacturing figures, including from Australia, Japan, India, the Euro Area, UK and the US, as well as the weekly US initial jobless claims figures, for the latest health check on several major economies.