FXStreet (Mumbai) – Gold futures on Comex erased a part of yesterday’s gains and witnessed steep losses on Tuesday as China’s effort to devalue the yuan raised concerns over the health of the world’s second largest consumer of the yellow metal, dragging prices lower.
Gold drops from 1106.70 levels
Currently, gold trades -0.47% lower at 1099, recovering from a dip to 1093.40 lows reached in early Asia. The yellow metal remains in red as traders digest the latest PBOC yuan fix news, suggesting negative developments evolving in China.
The People’s Bank of China (PBoC), the country’s central bank, has devalued the nation’s currency to its lowest rate against the US dollar in nearly three years. The move was a 1.9% “one-off deprecation” to make the exchange rate more market oriented, the central bank said.
Meanwhile, the US dollar rebounded higher following PBOC yuan devaluation which spurred demand for safe-haven currencies such as the greenback. The US dollar index, a virtual gauge of greenback’s strength, now trades 0.39% higher at 97.61. A stronger greenback makes dollar-priced in gold more expensive to holders on other currencies.
Overall bullion remains under pressure from a strong dollar, which is eroding demand for the lustrous metal as an alternative investment ahead of key US data release due later in the New York session.
Gold Technical Levels
The metal has an immediate resistance at 1105 and 1108.50 levels. Meanwhile, support stands at 1090 below which doors could open for 1083 levels
(Market News Provided by FXstreet)