Gold gains on softer dollar, safe-haven demand


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Gold prices rose on Tuesday, buoyed by a

pullback in the dollar and safe-haven buying due to economic

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slowdown concerns, though prospects of aggressive rate hikes

capped further gains.

FUNDAMENTALS

* Spot gold rose 0.5% to $1,718.21 per ounce, as of

0120 GMT.

* U.S. gold futures gained 0.5% to $1,731.30.

* The dollar index inched down 0.2% after touching a

20-year peak in the previous session.

* The euro zone is almost certainly entering a recession,

with surveys on Monday showing a deepening cost of living crisis

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and a gloomy outlook that is keeping consumers wary of spending.

* The European Central Bank faces the prospect of raising

interest rates aggressively when it meets on Sept. 8 just as the

economy enters a downturn.

* After Russia halted gas flows via a major pipeline to

Europe, several EU states triggered emergency plans that could

lead to energy rationing and fueling recession fears, with

inflation soaring and interest rates on the rise.

* However, further gains in gold were limited by

expectations that the U.S. Federal Reserve could deliver another

hefty interest rate hike in its fight against inflation during

its Sept. 20-21 policy meet.

* Even though gold is seen as a hedge against inflation and

economic uncertainties, higher interest rates increase the

opportunity cost of holding the non-yielding bullion and boosts

the dollar.

* Spot silver rose 0.9% to $18.32 per ounce, platinum

was 0.7% higher at $851.50 and palladium gained

0.7% to $2,047.68.

DATA/EVENTS (GMT)

0430 Australia RBA Cash Rate Sept

0600 Germany Industrial Orders MM July

0600 Germany Manufacturing O/P Cur Price SA July

0600 Germany Consumer Goods SA July

0830 UK All-Sector PMI Aug

1345 US S&P Global Comp, Svcs Final PMIs Aug

1400 US ISM N-Mfg PMI Aug

(Reporting by Eileen Soreng in Bengaluru; editing by

Uttaresh.V)



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