Metal prices were mostly higher Tuesday, as a rising yuan kept the dollar on the back foot and easing U.S.-China trade war concerns supported sentiment.
Gold futures for August delivery on the Comex division of the New York Mercantile Exchange were flat at $1,217.70 a troy ounce, nearing an intraday a low of $1,215.60.
China's move to stabilize the yuan pressured the dollar to session lows, raising demand for the yellow metal, which hit a one-week high intraday of $1.224.30.
The U.S. dollar index, which measures the greenback against a trade-weighted basket of six major currencies, fell by 0.14% to 95.06.
Dollar-denominated assets such as gold are sensitive to moves in the dollar. A fall in the dollar makes gold cheaper for holders of foreign currency and increases demand for the precious metal.
Analysts have previously suggested moves in the USD/CNY have been the dominant driver of commodity prices, reflecting investment sentiment on China's economy.
"While we see mounting trade tensions between the United States and China as the initial trigger, we believe that growing fears of a slowdown in China, not primarily because of the tensions but rather because of tightening credit, have become the dominant driver as of late," analysts at Julius Bear said in an email to clients in July.
"These fears are also reflected in a sharply depreciating Chinese yuan (CNY). The co-movement between the metals and the yuan has hardly been stronger than recently," they added.
Copper prices were given a further boost on fears a wage dispute at the world’s largest copper mine could result in a strike if an agreement isn’t reached.
Talks to resolve the despite between the Chile’s Escondida and the labor union were set to get underway Tuesday.
Copper prices rose 0.64% to $2.75, while zinc prices rose 1.11% at 2,601.50.
Aluminium prices fell 0.61% to 2,036.50, while Nickel Futures rose 1.35% to 13,872.50.