Devaluation of Chinese currency gives gold price a boost

Gold has risen to a three-week high of just shy of $1,120 per troy ounce today. Gold in euro terms has also made noticeable gains, significantly exceeding the €1,000 per troy ounce mark. The price rise was presumably triggered by the devaluation of the Chinese Yuan overnight by the People's Bank of China (PBoC), the country's central bank. The Yuan recorded its sharpest daily decline since 1994 as a result. 

The PBoC's measure could open the door to a further round of the global devaluation race between currencies, which should benefit gold as an alternative currency, notes Commerzbank. Furthermore, in taking this step China has made it clear that it will not be tightening monetary policy as the US Federal Reserve is about to do.