Investing.com - Gold prices jumped to a nine-week high on Thursday, as investors sought refuge in the precious metal amid a China-led global stock market meltdown.
Trading on China’s stock markets was suspended for the second time this week after just 30 minutes on Thursday, as a plunge of more than 7% after the open triggered circuit breakers.
Market sentiment was hit after 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.
Some market players see the tactic as an attempt by China to shore up growth, while others are concerned over a currency war that could destabilize the global economy.
The gloomy mood spilled over to European equity markets, where Germany's DAX crashed 3.5%, as another trading halt in China and sliding oil prices fueled heavy selling.
Elsewhere, Wall Street pointed to sharp losses at the open, with the Dow futures down 400 points, or 2.5%. On Wednesday, U.S. stocks closed at their lowest level since early October, weighed down by fresh concerns over China and slower global growth and as energy shares tumbled with oil prices.
Gold for February delivery on the Comex division of the New York Mercantile Exchange surged $11.60, or 1.06%, to trade at $1,103.50 a troy ounce as of 13:50 GMT, or 8:50AM ET. It earlier rose to $1,104.60, 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.
Also on the Comex, silver futures for March delivery inched up 4.9 cents, or 0.35%, to trade at $14.02 a troy ounce during morning hours in New York.
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.