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China Gifts Another Sunny Day to Precious Metals Bulls

August 12, 2015 at 16:02 by Andriy Moraru

The precious metals continued their rally today thanks to the second currency rate intervention in a row by the People’s Bank of China. Devaluation of the Chinese yuan sends gold, silver, and platinum higher as they experience increased demand from the diminishing likelihood of the interest rate hike in the United States.

Gold is currently demonstrating its fifth bullish daily trading session in a streak, hitting the new high in more than three weeks today. Silver shows a lot of volatility in response to the Chinese government’s actions, but has reached its highest price in a month today. Platinum, which struggled to lift off from its lowest level since January 2009 last Monday, is now trading near its 3-week high too.

Although the beginning of the noble metals’ rally predates Chinese actions towards yuan’s depreciation, the positive reaction to the CNY fall is evident. Yesterday, the People’s Bank of China (country’s central bank) decreased the yuan’s reference rate by 1.9 percent. Today, it continued devaluation with another 1.6 percent reference rate cut. The action created turmoil in the financial markets — traders view it as a start of a currency war, which will postpone the interest rate hike in the United States. The resulting market sentiment turned very favorable for such commodities as gold, silver, and platinum.

Gold spot price rose 1.3 percent as of 16:02 GMT today — from $1,110.67 to $1,124.43 per troy ounce. The intraday high was at $1,125.71 per troy ounce — the maximum since July 19. Silver gained 2.2 percent, rising from $15.21 to $15.55 per troy ounce, setting the daily high at $15.60 — the record level since July 12. Platinum added 1.9 percent today by going up from $981.46/ounce to $998.75/ounce with the session’s peak at $1,003.85/ounce — the level not seen since July 17.

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