Shanghai - Gold declined, ending its longest run of gains in almost three months, as China eased concern about a devaluation of its currency. Silver and palladium dropped.
The People’s Bank of China said it supports a strong, stable yuan in the long term after its Tuesday decision to devalue the yuan roiled global markets and sparked concern that more countries will weaken their currencies. The metal rose the previous five days.
Bullion is often used as an alternative store of value and tends to rise when currencies weaken. The metal also fell today as a gauge of the dollar rose. Prices reached a five-year low last month on expectations that the Federal Reserve will raise interest rates this year and as the greenback strengthened.
“If the yen devaluation will be slowed down substantially, then that removes some of the uncertainty in the market that has benefited gold,” Ole Hansen, an analyst at Saxo Bank in Copenhagen, said by phone. “We’re seeing traders putting some risk back on.”
Gold for immediate delivery lost 0.6 percent to $1 117.41 an ounce by 11:22 am in London, according to Bloomberg generic pricing. Prices gained 3.6 in the past five days and reached a three-week high earlier Thursday. Futures for December delivery declined 0.6 percent to $1 117.10 on the Comex in New York.
While China’s currency weakened, the pace of declines slowed. Bonds, another haven asset, also fell.
Gold investors bought 3.5 metric tons through physically- backed funds as of Wednesday, data compiled by Bloomberg shows. That was the first increase in more than a week and the most since June. Holdings rose from the lowest level since 2009.
Silver for immediate delivery fell 1.1 percent to $15.3811 an ounce in London. Platinum lost 0.6 percent to $994.25 an ounce, while palladium dropped 1.3 percent to $619.20 an ounce after a 4.4 percent surge.
BLOOMBERG