London
Gold rose more than one percent on Tuesday as the dollar cut gains and European stocks fell and investors assessed the impact of China's move to devalue its currency and prop up its economy.
Beijing allowed the yuan to fall to its lowest level in nearly three years after a run of poor economic data, with the central bank describing the move as a "one-off depreciation" of nearly 2 percent.
China's rate decision triggered a sharp but short-lived retreat in gold to a session low of $1,093.25 an ounce. Spot prices rebounded to a three-week high of $1,119 before trading up 0.8 percent at $1,112.76 an ounce by 0915 GMT.
"Probably gold is benefiting from fears that this is a new round of 'currency war'," Macquarie analyst Matthew Turner said, adding that the move increases uncertainties and risks about the global economy, which tends to be good for gold. Gold's best moment this year came in the first few months when we saw various FX swings, lots of different central banks cutting interest rates or intervening in their monetary policy.