By Ashitha Shivaprasad
(Reuters) – Gold rose on Tuesday after six straight sessions of losses as the dollar and Treasury yields dropped following weak U.S. business activity data.
Spot gold was up 0.7% at $1,747.00 per ounce by 1:43 p.m. ET (1743 GMT). Prices slipped in the last six sessions and hit $1,727.01 on Monday, the lowest since July 27.
U.S. gold futures settled up 0.7% at $1,761.2.
Private-sector business activity in the United States contracted for a second straight month in August to its weakest in 18 months.
“The data indicates a major contraction, showing the economy has weakened quickly, opening the door to the idea that the Fed might not be that aggressive, further helping gold,” said Edward Moya, senior analyst with OANDA.
The dollar index slipped 0.5%, making gold cheaper for overseas buyers, while a decline in U.S. Treasury yields made the yellow metal more attractive by lowering the opportunity cost of holding it.
Focus is now on Fed Chair Jerome Powell’s speech at an annual global central banking conference in Jackson Hole, Wyoming, on Friday.
Bullion tends to suffer in a high-rate environment as it yields no interest.
“If (gold) prices are able to breach $1,724, a selloff towards $1,700 is on the cards. Alternatively, a move back above $1,752 may open a path towards $1,770 and $,1800, respectively,” FXTM analyst Lukman Otunuga said.
Meanwhile, business activity across the euro zone contracted for a second straight month in August as the cost of living crisis forced consumers to curtail spending while supply constraints continued to hurt manufacturers, a survey showed.
“Europe is going into a recession, China is seeing a slowdown. Gold is eventually going to see some safe-haven trade again,” Moya added.
Spot silver rose 0.5% to $19.10 per ounce, platinum was also up 0.5% at $879.94, while palladium fell 0.6% to $1,983.37.
(Reporting by Ashitha Shivaprasad in Bengaluru; Editing by Shounak Dasgupta and Vinay Dwivedi)
