Investing.com - Gold prices rose in early Asian trade on Thursday with investors continuing to keep an eye on China and look ahead to other central bank actions regionally on rates.
On the Comex division of the New York Mercantile Exchange, gold for December delivery rose 0.11% at $1,124.30 a troy ounce.
Silver for September delivery was up a slight 0.03% at $15.525 an ounce and copper for September delivery was flat at 2.349 a pound.
Overnight, gold futures surged on Wednesday amid a weakening dollar, as the People's Bank of China took initial steps to stabilize fluctuations in the yuan one day after devaluing its currency by the highest amount in more than two decades.
In Beijing, the People's Bank of China (PBOC) intervened to prop up its tumbling currency after the yuan fell to a fresh three-year low midway through Wednesday's Asian session. One day after the Chinese central bank rattled global markets by unexpectedly devaluing its currency by 1.9%, the bank lowered the daily fix even further on Wednesday morning. Hours later, the renminbi slid to an intraday low of 6.4460 against the dollar around 3 a.m. EST, as currency traders continued to unload their long positions in the currency. The sell-off forced the PBOC into action, as it intervened late in the session to help the yuan pare some of its earlier losses. At the close of Asian trading, USD/CNY settled at 6.3877, up 0.0622 or 0.98% on the day.
China is the world's largest producer of gold and second-largest consumer behind India.
A rash of disappointing economic data in recent weeks has forced the PBOC to institute a wide range of stimulus measures aimed at boosting its flagging economy. Last weekend, the PBOC reported that Chinese exports plummeted by 8.3% in July marking its largest monthly decline since May. By devaluing the yuan, the PBOC hopes to make exports more competitive by making them relatively less expensive for foreign purchasers.
Elsewhere, the Federal Reserve Bank of Atlanta supported dovish arguments for a delayed interest rate hike on Wednesday with soft inflation projections for the month of August. In its monthly Business Inflation Expectations report, the Atlanta Fed said twelve month inflation expectations inched down to 1.8% from a 2015 yearly high of 2.0% in July. Current costs also fell mildly for August, declining 0.2% from the previous month 1.3%.
The Fed would like to see inflation move toward its targeted goal of 2% before it raises short-term interest rates for the first time in nearly a decade. Earlier this week, Fed governor Stanley Fischer indicated that it could be difficult to justify an imminent rate hike unless inflation moves significantly higher over the next several weeks.
Gold, which is not attached to dividends or interest rates, struggles to compete with high-yield bearing assets in periods of rising rates.