Gold prices re­verse losses, spurred by yuan's de­val­u­a­tion

The Pak Banker - - INTERNATIONAL BUSINESS/SPORTS -

Gold prices turned higher Tues­day, re­vers­ing a drop that came af­ter the sur­prise de­ci­sion by China to de­value its cur­rency. Gold prices ear­lier had slipped be­low the thresh­old of $1,100 an ounce af­ter The Peo­ple's Bank of China overnight al­lowed the yuan to de­value by 1.9%, in an ef­fort to boost flag­ging ex­ports, spur growth in the world's sec­ond-largest econ­omy and al­low the cur­rency to be driven more by mar­ket forces. Prices of the yel­low me­tal had climbed briefly the pre­vi­ous day, helped by a weaker dol­lar.

China ac­counts for nearly one-third of global gold de­mand. As the coun­try is one of the world's big­gest im­porters of the me­tal, a weaker yuan will make gold more ex­pen­sive for do­mes­tic buy­ers. "If any­thing, it may worsen the gold de­mand," Barn­abas Gan, economist with OCBC Bank in Sin­ga­pore, said of the Chi­nese de­ci­sion. A tum­ble in the price of gold to a five-year low in late July had sparked more re­tail buy­ing, which had been lack­lus­ter for months amid a cor­rup­tion crack­down by Bei­jing. Gold's late-July slump was trig­gered by selling in Asia, fol­low­ing a dis­clo­sure by China's cen­tral bank that its gold re­serves were far be­low mar­ket ex­pec­ta­tions. That data showed China hav­ing the fifth-largest of­fi­cial gold re­serves. Among other pre­cious met­als, the price of sil­ver SIU5, -0.41% turned higher by 2 cents, or 0.2%, to $15.31 per ounce, while plat­inum PLU5, +0.75% rose $5.60, or 0.6%, to $995.40 an ounce.

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