* Asian stocks slide as China allows yuan to fall for 2nd
day
* Gold has rebounded over 3 pct from July's multi-year low
* Fed seen on track to hike rates this year
(Updates prices)
By Manolo Serapio Jr
MANILA, Aug 12 (Reuters) - Gold gained for a fifth session
in a row on Wednesday to trade near a three-week high,
benefiting from safe-haven demand as risky assets slid after
China's devaluation of the yuan that stoked fears of a currency
war.
China's surprise 2 percent devaluation of the yuan on
Tuesday, seen as a move to bolster a flagging economy, was
condemned by U.S. lawmakers as a grab for an unfair export
advantage.
The move hit global equities, prompting some investors to
seek safe-haven assets such as gold which has now recovered more
than 3 percent from a 5-1/2-year low of $1,077 during a late
July rout.
Asian stocks and emerging market currencies tumbled on
Wednesday after Beijing allowed the yuan to fall sharply for a
second day.
Spot gold XAU= was up 0.5 percent at $1,114.40 an ounce by
0623 GMT, after peaking at $1,119 on Tuesday, its highest since
July 20.
"The only reason gold may benefit will be purely from a
safe-haven perspective," said OCBC Bank analyst Barnabas Gan.
But if China's action indeed spurs a currency war, every
currency would depreciate and the dollar's strength continues,
said Gan, which would eventually weaken gold.
Gan also said the weaker yuan would make it more expensive
for China, the world's top consumer, to import gold, potentially
extending weak Chinese demand that has been the case since 2014.
U.S. gold for December delivery GCcv1 gained 0.5 percent
to $1,113.10 an ounce.
China's currency devaluation is unlikely to distract the
U.S. Federal Reserve from a domestic economy that appears
increasingly ready for higher interest rates, according to
economists and Fed watchers.
That could limit gold's upside potential. A looming hike in
U.S. interest rates had weighed on non-interest yielding
bullion.
"We are still looking for a rate hike this year despite all
that's happened," said Gan.
Spot silver XAG= dropped 0.4 percent to $15.22 an ounce
after hitting a one-month high on Tuesday. Platinum XPT= was
steady at $984.70 an ounce, having touched a three-week top
overnight and palladium XPD= was also little changed at
$601.90.