Gold gains on dollar pullback after weak U.S. data

Gold rose on Tuesday, snapping six straight sessions of losses, helped by a pullback in the dollar and lower Treasury yields following weak U.S. business activity data.

Spot gold rose 0.9% at $1,750.59 per ounce by 10:33 ET (1433 GMT). Prices slipped in the last six sessions and hit $1,727.01 on Monday, the lowest since July 27.

U.S. gold futures rose 0.9% to $1,764.20.

"Dollar and yields have dipped after the weak flash PMI data, helping gold," said Edward Moya, senior analyst with OANDA.

"Also, 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."

U.S. private-sector business activity contracted for a second straight month in August to its weakest in 18 months.

The dollar index slipped 0.6%, making gold cheaper for overseas buyers. U.S. Treasury yields also declined. [USD/] [US/]

Focus was 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 0.9% to $19.18 per ounce, while platinum gained 0.4% to $879.31. Palladium was 0.3% lower at $1,990.23.