Investing.com - Gold prices edged slightly higher on Tuesday, but gains were expected to remain limited as hopes for a U.S. rate hike and a U.S. tax reform before the end of the year continued to support demand for the dollar.
Comex gold futures were up $1.63 or about 0.12% at $1,273.44 a troy ounce by 08:30 a.m. ET (12:30 GMT), just off an eight-week low of $1.271,21 hit earlier in the day.
The greenback remained supported after upbeat U.S. manufacturing data seemed to boost chances for a December rate hike by the Federal Reserve.
The Institute of Supply Management reported on Monday that its index of manufacturing activity climbed to a 13-month high of 60.8 in September from 58.8 the previous month.
The U.S. dollar has also been supported in recent session by growing hopes for U.S. tax reform after the Trump administration outlined plans for a sweeping overhaul of the U.S. tax code last week.
The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, was steady at a 93.46, near a one-and-a-half month highs of 93.78 hit overnight.
Gold is sensitive to moves higher in both U.S. rates and the dollar. A stronger dollar makes gold more expensive for holders of foreign currency, while a rise in U.S. rates lifts the opportunity cost of holding non-yielding assets such as bullion.
Elsewhere on the Comex, silver futures slipped 0.22% to $16.62 a troy ounce.