Gold extends rally on China FX move, delayed U.S. rate hike hopes
Investing.com - Gold prices rose for the fifth consecutive session on Wednesday to hold near a three-week high as China's surprise move to devalue its currency fanned hopes that the Federal Reserve could delay raising interest rates until the very end of 2015.
Gold futures for December delivery on the Comex division of the New York Mercantile Exchange tacked on $10.60, or 0.96%, to trade at $1,118.30 a troy ounce during European morning hours.
A day earlier, gold rallied to $1,119.10, the strongest level since July 20, before ending the session at $1,107.70, up $3.60, or 0.33%.
China allowed the yuan to fall sharply for the second straight day on Wednesday to hit the lowest level since October 2012, one day after announcing a near-2% devaluation of the exchange rate.
The 4% two-day plunge stoked concerns that China may allow the yuan to continue to depreciate, fueling fears over a currency war, as Beijing aims to make the nation's ailing exports more competitive on the global stage.
Some traders believe that the Federal Reserve could postpone raising interest rates as soon as September in response to China's currency devaluation move, as Fed officials are likely to remained concerned over global growth and inflation pressures.
Gold fell to a five-and-a-half year low of $1,072.30 on July 24 amid speculation the Fed will raise interest rates in September for the first time since 2006. But prices have since rebounded approximately 3% on hopes of a delayed U.S. rate hike.
Also on the Comex, silver futures for September delivery dipped 0.9 cents, or 0.06%, to trade at $15.27 a troy ounce.
Elsewhere in metals trading, copper for September delivery on the Comex division of the New York Mercantile Exchange slumped 2.5 cents, or 1.05%, to trade at $2.307 a pound during morning hours in London after hitting a session low of $2.292, a level not seen since June 2009.
Copper prices have been under pressure in recent weeks amid growing concerns over the health of China's economy.
Data released Wednesday showed that China's industrial production increased at an annual rate of 6.0% in July, disappointing expectations for a 6.6% gain.
The Asian nation is the world's largest copper consumer, accounting for almost 40% of world consumption last year.
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