Gold rose one percent on Tuesday as the dollar paused and global shares fell ahead of U.S. non-farm payroll data later in the week that could give clues as to when the Federal Reserve will raise interest rates.
Spot gold fell initially then firmed 0.8 percent to $1,197.23 an ounce by 1439 GMT. U.S. gold futures for June delivery were up $10.70 an ounce at $1,197.40.
“Gold was firm yesterday and is continuing the trend today, with dollar weakness helping,” Deutsche Borse’s MNI senior analyst Tony Walters said.
The dollar pared earlier gains to trade flat against a basket of major currencies.
Gold fell to a six-week low of $1,170 on Friday after the Federal Reserve indicated it saw a slowdown in the U.S. economy as transitory and did not rule out a rate rise this year.
“U.S. data will continue to be very important — if it’s good, we will eventually get lower gold prices,” Natixis analyst Bernard Dahdah said.
However, with a rate hike now likely in September rather than June, gold prices will probably remain in the current range for longer and will not drop as quickly as previously thought, Dahdah added.