Gold price edges up on safe-haven buying
London (Aug 14) Gold prices rose on the London spot market on Friday, benefiting from safe-haven buying of the investment metal amid worries about the outlook for China's economy after the fall in value of the yuan this week.
Spot gold was up 0.2 per cent at $US1,116.83 a troy ounce in morning European trade, having hit a three-week high in the previous session at $US1,126.81 an ounce.
The People's Bank of China devalued the yuan for three days in a row, the catalyst for investors to turn back to gold as a hedge against risk. The yellow metal is considered a safe store of value in times of high economic volatility and demand tends to spike during these periods.
"We saw a lot of gold buying in the last few days, particularly in Asia, on concerns of competitive devaluation in Asia and also whether [yuan] devaluation might prompt a postponement of the US rate hike," said David Wilson, director of metals research and strategy at Citigroup.
The metal's gains were capped by better-than-expected retail-sales data out of the US which strengthened the dollar. As gold is priced in dollars, it becomes more expensive for other currency holders to buy when the greenback gains in value. This often leads to demand slackening and metal prices drifting lower.
Among the other precious metals, spot silver was up 0.3 per cent at $US15.454 an ounce, spot platinum was up 0.8 per cent at $US993.23 an ounce and spot palladium was up 1.0 per cent at $US618.90 an ounce.