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MTECHTIPS:-Gold surges to 3-week high, as PBOC looks to stabilize a crashing yuan

MTECHTIPS:-Gold surges to 3-week high, as PBOC looks to stabilize a crashing yuan

Gold futures surged on Wednesday amid a weakening dollar, as the People’s Bank of China took initial steps to stabilize fluctuations in the yuan one day after devaluing its currency by the highest amount in more than two decades. On the Comex division of the New York Mercantile Exchange, gold for December delivery soared to its highest level in three weeks before settling at $1,123.70 an ounce, up 16.00 or 1.44% on the day. During Wednesday’s session, gold futures traded in a broad range between 1,101.30 and 1,125.00 an ounce, closing higher for the third straight day. The precious metal is now up more than 2.4% since touching down to five and a half year lows in late-July. Gold likely gained support at 1,073.70, the low from July 24 and was met with resistance at 1,133.80, the high from July 20. In Beijing, the People’s Bank of China (PBOC) intervened to prop up its tumbling currency after the yuan fell to a fresh three-year low midway through Wednesday’s Asian session. One day after the Chinese central bank rattled global markets by unexpectedly devaluing its currency by 1.9%, the bank lowered the daily fix even further on Wednesday morning. Hours later, the renminbi slid to an intraday low of 6.4460 against the dollar around 3 a.m. EST, as currency traders continued to unload their long positions in the currency. The sell-off forced the PBOC into action, as it intervened late in the session to help the yuan pare some of its earlier losses. At the close of Asian trading, USD/CNY settled at 6.3877, up 0.0622 or 0.98% on the day.

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