Commodities, mining stocks sinking as China devalues its currency again

Commodities, mining stocks sinking as China devalues its currency again

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Most commodities, from industrial metals to oil, were crashing on Wednesday after China decide to devalue its currency for the second day in a row, renewing concerns about growth in the world’s largest consumer of raw materials.

Copper fell about 7%, going under $5,100 per tonne on the LME for the first time since July 2009, to a session low of $5,062. It was last at $5,117, down $8 on the previous day’s close. In New York, it was slightly up (0.35%) to $2.340 a pound at 9:10 am ET.

Oil prices steadied after falling almost 3% on Tuesday, back below $50 a barrel. The recovery was triggered by an upbeat report from the IEA balanced the bearish impact of a further weakening of the Yuan and disappointing Chinese industrial output data.

Mining stocks fell again Wednesday, capping a miserable month for the sector. Once again Glencore (LON:GLEN) led the slump, as its shares dropped nearly 6%, driven down by concerns that the weak copper prices and general market conditions are straining the firm’s finances, ahead of first-half results next week.

BHP Billiton (ASX:BHP), was down 4.3% and rival Rio Tinto (ASX:RIO) was trading almost 3% lower than Tuesday in Sydney at 9:25 am ET.

However, gold is profiting from the situation, heading for its longest winning streak in three months.

Bullion prices were moderately better on Wednesday morning, hitting another three-week high in New York, on safe-haven demand and a less-bearish near-term chart posture.

The precious metal gained about 1.14%, or $11 an ounce to as high as $1,120.80.

Despite a surge in the US dollar, against which the Yuan is fixed and which usually moves in inverse correlation to the precious metal, gold has recorded four positive sessions in a row.