Gold traded higher as the U.S. dollar and stock markets dropped on the further yuan devaluation. China's central bank set Wednesday's daily fixing at 6.3306 per U.S. dollar, down from 6.3231 on Tuesday.

The central bank said on Tuesday that it was a "one-off depreciation".

"Looking at the international and domestic economic situation, currently there is no basis for a sustained depreciation trend for the yuan," the central bank said on Wednesday.

A weaker yuan should help to boost the activity in the manufacturing sector and exports, which dropped 8.3% year-on-year in July.

The yuan devaluation could mean that the Fed will delay its interest rate hike.

Gold production in China climbed 8.0% year-over-year to 228.7 tons in the first six months of 2015. Gold consumption in China totalled 561.4 tons.

October futures for gold on the COMEX today rose to 1121.80 dollars per ounce.