Gold Edges Higher In Asia

Gold gained $3 to trade at 1115.70 even as the US dollar rallied. Silver dipped 8 points to 15.205 diverging from gold as base metals are weak. Platinum added $2.15 to 994.90. Stress from China continues to disturb traders this morning.

Gold edged higher on Monday as concerns persisted over a weaker yuan after China devalued its currency last week, with the uncertainty likely to burnish bullion’s safe-haven appeal. The weaker yuan could still prompt the US Federal Reserve not to raise interest rates as soon as next month, as many had expected previously, despite continued signals of a strengthening US economy.

“The repercussions of China’s move are more deep-seated than it appears and over the course of the next few weeks, gold should remain elevated on growing concerns about the state of China’s health,” said Howie Lee, analyst at Phillip Futures in Singapore. China’s devaluation of its yuan last week helped gold recover some lost ground, pulling it up from a 5-1/2-year low of $1,077 reached during a late-July rout.

Gold held gains following the first weekly increase since June after China increased its bullion reserves.

The metal climbed 1.9 percent last week after China’s surprise yuan devaluation on Aug. 11 boosted haven demand. That was the biggest weekly increase since May. China revealed on Friday that it boosted holdings by 1.1 percent in July. The disclosure came about a month after the country ended six years of mystery surrounding its hoard, revealing a 57 percent jump in assets since 2009.

China’s devaluation of its yuan last week helped gold recover some lost ground, but bullion has pared some of those gains as fears abated that Beijing would pursue a sustained depreciation of its currency.

That has put the market focus back on a looming US rates increase. US industrial output advanced at its strongest pace in eight months in July in another bullish sign for third-quarter economic growth that boosts the prospects of a rate hike next month.

Minutes from the Fed’s July 28-29 meeting due on Wednesday will offer vital clues about its plan to hike rates for the first time since 2006, with rebounding retail sales, solid jobs growth and rising construction all pointing to next month as gross domestic product stays above trend for the world’s largest economy.

Hedge fund Paulson & Co cut its stake in the world’s biggest gold-backed exchange-traded fund in the second quarter of 2015, after holding it unchanged for six straight quarters, just before prices took a tumble.

Gold demand declined 12 per cent globally to a six-year low of 914.9 tonnes in the second quarter, mainly due to a decrease in demand from consumers in India and China, according to the World Gold Council.  The demand stood at 1,038 tonnes in Q2 of 2014, the WGC Gold Demand Trends report for Q2 of 2015 showed.