Gold prices hit a one-month high on Tuesday, boosted by a lower dollar after US economic data persuaded investors to reassess the idea of an imminent Fed rate hike, while security concerns rose following a bomb blast in Russia the previous day. Spot gold was up 0.2 percent at $1,255.9 an ounce by 1350 GMT after touching $1,261.15, its highest since February 27. US gold futures climbed 0.3 percent to $1,257.8.
The US Institute for Supply Management said its index of national factory activity fell to 57.2 in March from 57.7 in February, while automakers reported a 1.6 percent drop in US sales last month. "The dollar's gains could be coming to an end. It has been rising and that's a headwind for the US economy," said Marex Spectron analyst Guy Wolf.
"People are not so worried about inflation, they don't think the Fed is behind the curve. People are not so optimistic about (US President Donald) Trump being able to deliver quickly on his election promises about taxes and infrastructure." Investor interest can be seen in holdings of SPDR Gold Trust, the world's largest gold-backed exchange-traded fund, which climbed 0.53 percent to 836.77 tonnes on Monday from 832.32 tonnes on Friday.
"While the European elections, Brexit negotiations and Trump's foreign policies could reignite safe-haven interest, gold is not without hurdles," Standard Chartered analysts said in a note. "We believe the fragile physical market and Fed rate hikes will create a softer footing for gold prices."
On the technical front, gold needs to close above the 200-day moving average, currently around $1,259, to gather momentum for $1,263.80, the Feb. 27 peak, chart analysts say. Spot silver rose 0.3 percent to $18.28, having hit a one-month high at $18.412 an ounce. Platinum gained 0.8 percent to $959.0 and palladium added 0.6 percent to $807.2.