Gold rose 1 percent 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. Spot gold rose to a session high of $1,147.16 an ounce and was up 0.6 percent at $1,140.50 an ounce by 2:34 pm EDT, while US gold for December delivery settled up 0.6 percent at $1,139.80 an ounce.
Gold would suffer from higher interest rates because they would increase the opportunity cost of holding the metal. "The price of gold is vulnerable to one last dip if, as we anticipate, the Fed presses ahead with a first hike in US interest rates soon," said Capital Economics in a note. "But we remain positive on the medium-term prospects for the precious metal, as shown in our end-2015 and end-2016 forecasts of $1,200 and $1,400 respectively." Spot palladium moved sharply lower, down as much as 4.1 percent to $574.25 an ounce. Platinum was down 0.5 percent at $1,001.75 and silver was down 0.1 percent at $14.59 an ounce.
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