Gold prices increased to begin the new trading week as market participants try to gauge the impact of Chinese currency intervention, while seasonal buying bolsters demand.
Gold for December delivery on the Comex division of the New York Mercantile Exchange rose $5.70 to $1,118.40 per pounce. Trade ranged from $1,112.90 to $1,122.20.
In ongoing currency news, the People’s Bank of China (PBoC) devalued the yuan to 6.3939 against the dollar – a continuation from last week’s cut of 4.6 percent to the lowest point since 1994.
The bank is trying to jumpstart slowing exports and equity markets that have grown increasingly bearish.
Lask week, the PBoC announced that it bought 19 tonnes of gold last month when prices were at five year lows. Total gold holdings were at 1,677 tonnes at the end of July, up one percent.
“The week has started calmly for gold, as the market continues to digest the implications of last week’s depreciation of the RMB and the PBOC’s more open information policy with respect to its gold reserves,” ICBC Standard Bank said.
“On the physical side, however, while buying interest has eased back from last week’s high volumes, have been generally solid so far. The end of Ramadan has triggered the start of a seasonal upturn in Middle Eastern demand, though the speed of the 6 percent rally in gold in rupees is likely to make Indian dealers cautious over the next few days,” the bank added.
Meanwhile, the net long fund position (NLFP) in gold increased by 2,542 contracts, or nine percent, to 32,442 from 29,900 contracts in the week ending August 11, according to the latest CFTC statistics.
The increase in the net length for the second consecutive week was driven by long accumulation – up 2,986 contracts- that was slightly counterbalanced by a small increase in short positions of 444 contracts. The net length is down about 72 percent in the year-to-date.
In data today, the NAHB housing market index in August was 61, just below the 62 forecast. However, the Empire state Manufacturing Index in August declined to -14.9, a staggering miss from the 5.0 consensus.
Turing to US equities, the Dow Jones industrial average and S&P were each up 0.4 percent, while the dollar was 0.3 percent stronger at $1.1077 against the euro.
As for the other precious metals, Comex silver for September delivery was up 7.7 cents at $15.290 per ounce. Trade has ranged from $15.180 to $15.375.
Platinum for October delivery on the Nymex rose $5.8 at $999.80 per ounce, while the most-actively traded palladium contract was at $613.95 per ounce, down $3.55.
(Editing by Tom Jennemann)
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