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Hansen: Commodities challenged by China crisis

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China's decision to devalue the renminbi has sent ripples across global markets. Saxo's Ole Hansen notes that commodities have been badly hit, as the country is one of the world's biggest importers as well as producers of them. Those commodities hurt by the People's Bank of China's decision include oil, copper and soybeans.

Hansen says that on Tuesday, WTI closed at its lowest level in six years - just as OPEC announced its production levels in July had hit another three-year high. Yet again, he says, the focus is on this oversupply. He asks whether WTI could fall to USD 30 a barrel. Later this Wednesday, the US inventory report will be released which could offer a glimmer of hope if production levels are down.

The commodity that Hansen says could benefit from the China move is gold. It's had a negative month, but over the last two days the market has moved slightly higher - in particular gold priced in Renminbi (XAUCNH). Ole says the Chinese invest heavily in the gold market so they may see the precious metal as a safe haven. He also believes the pressure to sell gold is being reduced because many now think a Fed hike in interest rates next month is less likely.