NEW YORK: Gold prices edged up on Tuesday as the dollar weakened, although a better-than-expected US manufacturing data improved hopes about a US economic recovery and pulled the metal down from a near two-week high.
Spot gold was up 0.3% at $1,975.05 per ounce by 12:18 pm EDT (1618 GMT), after hitting its highest since Aug. 19 at $1,991.91.
US gold futures gained 0.1% to $1,980.20.
"The main reason (for gold's rise) right now is the weaker dollar. But, a better-than-expected ISM number took some shine off gold this morning," Bob Haberkorn, senior market strategist at RJO Futures said.
The US dollar was holding close to a more than two-year low hit earlier in the day, making gold cheaper for holders of other currencies.
However, capping gold's advance, US manufacturing activity accelerated to its highest level in nearly two years in August, the Institute for Supply Management (ISM) data showed.
"(The better data) doesn't necessarily change the picture for the US Federal Reserve. The trend (in gold) is still higher," Haberkorn added.
The US central bank last week announced an average inflation target policy, which will allow rates to stay low even if inflation rises a bit in the future.
Gold should remain supported in this environment of firming inflation expectations and a weakening US dollar, said Daniel Ghali, commodity strategist at TD Securities.
Bullion, which has risen about 30% so far this year, is seen as a hedge against inflation and currency debasement, while lower interest rates reduce the opportunity cost of holding non-yielding bullion.
Elsewhere, silver was up 0.7% at $28.43 per ounce, after hitting its highest since Aug. 11.
Platinum rose 1.5% to $943.75 and palladium climbed 2.1% to $2,290.53.
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