Gold prices increased on Monday as there were apprehensions over weaker yuan after China’s Central Bank has devaluated its currency last week, with the uncertainty likely to brighten bullion’s safe-haven appeal.
The weaker yuan could still signal the U.S. Federal Reserve not to raise interest rates as was expected next month, though signals of a strengthening U.S. economy continued.
Howie Lee, analyst at Phillip Futures in Singapore said, “The consequences of China’s devaluation of it’s currency have more impact than it appears and over the due course of next few weeks, gold should remain upraised on growing perturbs about the state of China’s economic conditions,”
Spot gold gained 0.4 percent at $1,117.80 an ounce by 0600 GMT. The metal touched a three-week high of $1,126.31 on Thursday, thereby ending a seven-week losing streak.
U.S. gold for December delivery rose 0.4 percent to USD 1,117.30 an ounce against last weekend’s level of USD 1,185.60.
China’s devaluation of its currency last week helped gold recover it’s lost ground to some extent, pulling it up from a five and half year low of $1,077 reached during a late-July scatter.
Howie said there is a chance of gold rising as far as $1,150 if the U.S Federal Bank does not raise interest rates in next month.