Silver for September delivery added 19.2 cents, or 1.26 percent, to close at $15.476 per ounce.
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Gold rose for a fifth session in a row on Wednesday, hitting a fresh three-week high as the dollar and European equities slid on concerns over China’s devaluation of its currency.
Some market participants warned the precious metal may have more downside, after falling 7% from its June highs.
The bank of China performed a one-off depreciation of the Chinese yuan, causing it to fall to a record low since April 2013, as part of a free-market reform. The volatility in the U.S. currency comes as investors weigh the chances of an interest-rate increase from the Fed in September, a move that is expected to boost the dollar and hurt gold.
Gold benefitted thanks to its status as a safe haven during economic turmoil and a storer of wealth.
Investors are “returning back to the safety of gold amid market concerns around a potential currency war”, Australia & New Zealand Banking Group Ltd. said in a report.
The US central bank will hope that the surprise move is not the beginning of a series of competitive devaluations that could send the dollar much higher than its slight rise yesterday, weakening already soft US inflation, economists and Fed watchers said.
And in a note Monday, the commodity team lowered its price outlook for gold by 8% for the second half of the year and by 1% for 2016.
In addition, the U.S. Commerce Department said that retail sales increased by 0.6% last month, beating expectations for a gain of 0.5%, while core retail sales, which exclude automobile sales, rose by 0.4% in July, matching forecasts. Platinum was steady at $984.70 an ounce, having touched a three-week high overnight, while Palladium was little changed at $601.90.
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Gold prices appeared to be clinging to strong weekly gains amid speculation the Federal Reserve might delay hiking interest rates. Making the negative tendency even more evident, a report by the World Gold Council showed that global gold demand tumbled to the lowest in six years in the second quarter after top two consumers China and India purchased less gold jewelry as incomes at both countries were separately hit. Everyone will now be awaiting for clues from the Federal Reserve on how this move might impact their attention to begin raising US interest rates and if it does, there is inspiration for Gold bulls to continue recovering what have been stunning losses over the previous months.
