* Stocks slide as China allows yuan to fall for 2nd day
* Gold has rebounded over 3 pct from July's multi-year low
(Updates prices, adds comment)
By Marcy Nicholson and Clara Denina
NEW YORK/LONDON, Aug 12 (Reuters) - Gold rose for a fifth
session in a row on Wednesday, hitting a fresh three-week high
as the dollar and global equities slid on concerns over China's
devaluation of its currency.
Earlier in the day, the People's Bank of China CNY=CFXS
set the yuan's midpoint reference rate CNY=SAEC weaker than
Tuesday's surprise 2 percent devaluation. ID:nZZN09IT00
The move sparked fears of a currency war and hit global
equities, prompting some investors to seek assets perceived as
safer such as gold. The metal has now recovered more than 4
percent from a 5-1/2-year low of $1,077 hit during a late-July
rout.
Spot gold XAU= rose as much as 1.2 percent to its highest
since July 20 at $1,121.40 an ounce and was up 0.9 percent at
$1,119.10 by 1413 GMT.
U.S. gold for December delivery GCcv1 gained 1.4 percent
to settle at $1,123.60 an ounce.
"The bears have been running the show now for some time and
that devaluation (on Tuesday) was a bit of a bash in the eye for
the bears... but we haven't seen any strong fresh buying, it is
more a short-covering rally," bullion broker Sharps Pixley chief
Ross Norman said.
Gold was lifted by a weaker dollar .DXY , down 1.1 percent
against a basket of currencies, and lower U.S. Treasury yields
on doubts over whether the U.S. Federal Reserve will raise
interest rates following China's devaluation. FRX/
"It's benefiting gold the most as major currency debasement
should and would expect gold to test key resistance at $1,130,"
said Tai Wong, director of base and precious metals trading for
BMO Capital Markets, referring to the yuan devaluation.
"It's unclear how much more yuan devaluation we will see so
gold sellers are likely to hold fire at the moment."
The weaker yuan would make it more expensive for China, the
world's top consumer, to import gold, said OCBC Bank analyst
Barnabas Gan.
"The potential for the monetary authorities to further
devalue the currency may raise fears of inflation and may raise
more general concerns about official intervention in financial
markets," said David Jollie, head of research for Mitsui and Co
Precious Metals, in a note.
"This could bring forward some customer purchasing of
jewelry or other expensive items, potentially boosting demand
for gold and platinum in particular."
Spot silver XAG= rose to a one-month high of $15.58 an
ounce. Platinum XPT= was up 1 percent at $993.50 an ounce and
palladium XPD= climbed 3.2 percent to $621.25.