Gold is ripping higher on Wednesday.
The precious metal gained about 1.14%, or $US11 an ounce to as high as $US1,120.80. After crossing the key $US1,110 level earlier this week, gold has climbed to a three-week high.
Gold was part of the rout in commodities that accelerated in June and July. The metal flash-crashed July 19, and sank further after China disclosed lower-than-expected central bank stockpiles.
Several analysts put out very bearish outlooks for gold, with Morgan Stanley saying last month that China’s announcement was “the latest in a string of bearish events.”
And in a note Monday, the commodity team lowered its price outlook for gold by 8% for the second half of the year, and 1% by 2016. The team sees gold averaging $US1,139 an ounce for this year versus $US1,189 prior.
Over the last two days, however, the metal has caught a bit of a break from its slide.
Markets have been focused on China, where the central bank devalued the currency amid a slowing economy.
In a morning note to clients, Accendo Markets wrote, “Gold ($US1114) benefitting from China’s Yuan being allowed to devalue again, with the prospect of a currency war drawing risk averse investors into the safer haven of an alternative currency that sets its own price.”
Here’s a chart showing the move higher overnight and on Wednesday.