Daily Gold Update

Source: Bill Musgrave, American Gold Exchange

Austin— Gold gained for a fourth session, adding 0.3% to close near $1,108, after China radically devalued its currency, causing a sell-off in equities and stoking safe-haven demand.

China slashed the yuan by nearly 2%, the biggest one-day drop in more than 20 years, after data released over the weekend showed exports plunging 8% in July. Tantamount to a massive stimulus effort, the surprising move is the latest attempt by the PBOC to re-inflate China's flagging economy, which has slowed to its worst growth rate in decades.

Gold traders saw the forex action as potentially launching a new wave of currency wars, in which successive nations cheapen their currencies in order to make their exports more price-competitive. Gold typically does well during periods of currency devaluation as investors seek out alternative stores of value to hedge against currency risk.

Momentum from yesterday's comments by the Fed's Stanley Fischer also supported the yellow metal. Seeming to push back against Dennis Lockhart of the Atlanta Fed, who said last week that a September rate was all but decided, the influential Vice Chair strongly suggested interest rates are unlikely to rise in September because inflation remains too low. He also cited global deflationary pressure as a serious concern of the Fed's.

All three major U.S. stock indexes fell by 1% or more on fears about the health of the global economy. The dollar edged higher, pressuring most commodities denominated in it for international trade. Oil futures dropped to the lowest level in six years.

The other precious metals finished lower, with silver dipping less than 0.1% while platinum and palladium fell 0.3% and 1.1%, respectively.

At the Comex close: December gold gained $3.60 to $1,107.70; September silver dipped one cent to $15.28; October platinum slid $2.50 to $992.30; and September palladium lost $6.95 to $599.25 an ounce.