Gold rose on Tuesday as the dollar and global equities dropped on fresh signs of economic weakness in China and uncertainty over the timing of the Federal Reserve’s first interest-rate increase in nearly a decade.
Activity in China’s factory sector shrank at its fastest rate in at least three years in August as domestic and export orders tumbled, increasing investor concern that the world’s second-largest economy could be lurching toward a hard landing.
Spot gold was up 0.6 percent at $1,140.51 an ounce by 1203 GMT, while U.S. gold for December delivery was up 0.7 percent at $1,140.30.
The metal posted its biggest weekly drop in five last week, weighed by a steady dollar and strong U.S. economic data, supporting the case for a rate rise as early as this month.
Gold, which is on track for a 4 percent fall this year, would suffer from higher interest rates because they would increase the opportunity cost of holding the metal. Conversely, a delayed rate increase would relieve some selling pressure, if only temporarily.