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MTECHTIPS;-Gold closes slightly higher in choppy trade, after China devalues yuan

MTECHTIPS;-Gold closes slightly higher in choppy trade, after China devalues yuan

Gold futures closed slightly higher following a day of unpredictable, see-saw trading, as China lowered the value of its currency by almost 2% marking its most significant devaluation in more than two decades. In overnight trading, the People’s Bank of China devalued the renminbi to 6.2298 against the dollar on Tuesday, resulting in a 1.9% adjustment from Monday’s level of 6.1162 versus the greenback. In response, the Chinese yuan suffered its worst one-day decline in more than a decade and fell to its lowest level in three years since the central bank widened the trading band against the dollar in April, 2012. It represents the sharpest one-day loss since China abandoned its currency peg for a managed float in January, 1994, as part of a broader series of reforms enacted to promote a new “socialist market economy.” During the seminal event more than 20 years ago, China devalued the yuan 33% to 8.7% against the dollar. A central bank maintains a managed float system by periodically intervening to change the value of its currency in periods of severe economic volatility. On the Comex division of the New York Mercantile Exchange, gold for December delivery surged to $1,118.90 an ounce, its highest level since July 20, before falling back to $1,108.60, up 4.50 or 0.40%. Gold futures wavered between $1,093,40 and $1,118.90 during a choppy day of trading. In spite of the late sell-off, gold still closed at its highest level since late-July.
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