Investing.com - Copper prices fell sharply on Tuesday, while gold rallied to the highest level in three weeks, after China devalued its currency in a surprise move.
China's central bank devalued the yuan by nearly 2%, allowing the currency to fall to levels last seen in 2012, in an effort to make the country's exports more competitive and boost the economy amid lackluster growth.
Copper for September delivery on the Comex division of the New York Mercantile Exchange dropped 4.4 cents, or 1.81%, to trade at $2.356 a pound during European morning hours.
On Monday, copper tumbled to $2.307, a level not seen since June 2009, before turning higher to settle at $2.400, up 6.7 cents, or 2.89%.
Copper prices have been under pressure in recent weeks amid growing concerns over the health of China's economy.
Figures released over the weekend showed that Chinese exports dropped 8.3% in July, their biggest fall in four months, while producer prices fell to a six-year low.
The Asian nation is the world’s largest copper consumer, accounting for almost 40% of world consumption last year.
Elsewhere, gold futures for December delivery tacked on $8.90, or 0.81%, to trade at $1,112.90 a troy ounce after hitting a session peak of $1,118.90, the strongest level since July 20.
Traders continued to mull the timing of a Federal Reserve rate hike after Fed Governor Stanley Fischer said Monday the central bank is concerned about low inflation and won't start to raise rates before it sees inflation returning to more normal levels.
The comments sparked uncertainty surrounding a Fed rate hike in September and prompted some investors to argue that the central bank might hold off on raising rates until December.
Gold fell to a five-and-a-half year low of $1,072.30 on July 24 amid speculation the Fed will raise interest rates in September for the first time since 2006.
Expectations of higher borrowing rates going forward is considered bearish for gold, as the precious metal struggles to compete with yield-bearing assets when rates are on the rise.