Gold prices fell from the previous session’s three-week peak on Tuesday, as the U.S. dollar marched higher after China devalued its currency in a surprise move.

Gold futures for December delivery on the Comex division of the New York Mercantile Exchange shed $4.40, or 0.4%, to trade at $1,099.90 a troy ounce during European morning hours.

A day earlier, gold rallied to $1,108.50, the strongest level since July 21, before ending the session at $1,104.10, up $10.00, or 0.91%.

China’s central bank devalued the yuan by nearly 2% on Tuesday, allowing the currency to fall to levels last seen in 2012, in an effort to make the country’s exports more competitive and boost the economy amid lackluster growth.

The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, was up 0.1% at 97.32 early Tuesday, coming off from lows of 97.08 struck on Monday.

© Reuters.  Gold drops from 3-week high as China move lifts dollar

Traders continued to mull the timing of a Federal Reserve rate hike after Federal Reserve Governor Stanley Fischer said Monday that the Fed is concerned about low inflation and won’t start to raise rates before it sees inflation returning to more normal levels.

The comments sparked uncertainty surrounding a Fed rate hike in September and prompted some investors to argue that the central bank might hold off on raising rates until December.

Gold fell to a five-and-a-half year low of $1,072.30 on July 24 amid speculation the Fed will raise interest rates in September for the first time since 2006.

Expectations of higher borrowing rates going forward is considered bearish for gold, as the precious metal struggles to compete with yield-bearing assets when rates are on the rise.

Also on the Comex, silver futures for September delivery dropped 16.2 cents, or 1.06%, to trade at $15.13 a troy ounce. Prices surged to $15.37 on Monday, a level not seen since July 14, before closing at $15.29.

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