US gold for December delivery rose half a percent to $1,138.30 an ounce.
The dollar slipped in Asia Monday on fears that China’s economic malaise could drag on global growth, reversing a rally that had been fuelled by hopes for a September Federal Reserve rate hike.
The dollar index nudged up 0.1 per cent to 95.532 after an overnight loss of 0.6 per cent.
“The dollar struggled as worries about a weakening Chinese economy threw up a potential obstacle for the Fed to raise interest rates“, he said.
“Only a definite move above $1163/1173 will mean further recovery”, says Stephanie Aymes, head of technical analysis at French investment bank and bullion market-maker Societe Generale, pointing to the gold price’s “multi-month descending trend”.
On Wednesday, buyers will comb the employment report as a tough predictor of the extra complete US non-farm payrolls due on Friday.
In the near term, China stocks dropped in what could foreshadow another rough week for equities, potentially boosting haven demand for the metal.Still, hedge funds and money managers hiked bullish bets in COMEX gold and raised their net long position in silver futures and options in the week ended August 25, U.S. Commodity Futures Trading Commission data showed.
Speaking to delegates at the Kansas City Federal Reserve’s annual retreat in Jackson Hole, Wyoming, Fed Vice-Chairman Stanley Fischer, however, hinted that the United States central bank has not totally abandoned a rate hike, saying that inflation will likely rebound given downward pressure from the strengthening dollar, declining oil prices and improving labor market. In late afternoon trading in Europe saw the dollar 1.17% lower against the Japanese yen, changing hands with the market’s preferred carry trade currency at JPY119.81.
Later in the session, the U.S. Institute of Supply Management is to report on manufacturing growth.
The euro was mixed at $1.1286 and 135.49 yen against $1.1313 and 135.20 yen.
Spot palladium rose for the third straight session, up 2.2 percent to $596.50.
“Concerns about China are a key drive in currency markets and the PMIs were weaker and not good for overall risk sentiment”, said Yujiro Goto, currency strategist at Nomura.
The dollar index, a measure of six major currencies’ value against the greenback, was last up 0.40 percent and had added to gains when ADP reported that USA private payrolls increased 190,000 last month.