Investing.com - Gold prices rallied to a nine-week high on Thursday, as investors sought safety in the precious metal amid a China-led global stock market meltdown.
Global stock markets tumbled on Thursday, as trading in Chinese equities was suspended for the second time this week after a plunge of more than 7% after the open.
Adding to risk aversion, the People's Bank of China set its official yuan midpoint rate lower compared with Wednesday's fix. It was the largest daily drop in the midpoint rate since last August, when an unexpected almost 2% devaluation of the currency sparked a broad based selloff in markets.
Gold for February delivery on the Comex division of the New York Mercantile Exchange tacked on $5.10, or 0.47%, to trade at $1,097.00 a troy ounce as of 09:47 GMT, or 5:47AM ET. It earlier rose to $1,102.50, the most since November 6.
On Wednesday, gold jumped $13.50, or 1.25%, after North Korea said it had conducted a successful nuclear test and as tensions between Saudi Arabia and Iran remained high.
The yellow metal is up almost 4% so far this week on safe-haven demand amid a global stock market rout, worries over the Chinese economy and heightened geopolitical tensions.
Meanwhile, investors kept an eye on upcoming U.S. data to gauge if the world's largest economy is strong enough to withstand further rate hikes in 2016.
The U.S. is to produce weekly data on initial jobless claims at 8:30AM ET. Also looming large is Friday's nonfarm payrolls report for December.
The minutes of the Federal Reserve’s December interest rate-raising meeting showed that some officials expressed concerns that inflation could remain at stubbornly low levels. Some members also said their decision to hike was a "close call, particularly given the uncertainty about inflation dynamics”.
The minutes assured markets that further U.S. rate hikes would be gradual.
Also on the Comex, silver futures for March delivery inched up 0.9 cents, or 0.06%, to trade at $13.98 a troy ounce during European morning hours.
Elsewhere in metals trading, copper futures tumbled to six-week lows on Thursday, as steep declines on Chinese stock markets and a further depreciation of the yuan dampened appetite for the red metal.
Market players are concerned that the plunge in the stock market could spread to other parts of the Chinese economy, triggering fears that the Asian nation's demand for the industrial metal will decline.
Copper is down 4.5% so far this week as investors focused on the deteriorating outlook for China and its impact on the global economy. The Asian nation is the world’s largest copper consumer, accounting for nearly 45% of world consumption.