Investing.com - Gold prices edged higher on Tuesday, as traders continued to monitor the direction of the dollar to gauge the appeal of the precious metal.
On the Comex division of the New York Mercantile Exchange, gold futures for August delivery tacked on $3.70, or 0.31%, to trade at $1,192.40 a troy ounce during U.S. morning hours. Prices held in a range between $1,186.10 and $1,194.80.
A day earlier, gold jumped to $1,204.70, the strongest level since May 26, before turning lower to settle at $1,188.70, down $1.10, or 0.09%. Futures were likely to find support at $1,180.20, the low from May 28, and resistance at $1,208.90, the high from May 26.
The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, was down 0.7% at 96.85, the lowest level since May 26.
Dollar weakness usually benefits gold, as it boosts the metal's appeal as an alternative asset and makes dollar-priced commodities cheaper for holders of other currencies.
The dollar weakened as investors locked in profits from the greenback's recent rally, which came on the back of growing expectations for higher interest rates later this year.
Most market experts expect the Federal Reserve to start raising rates in September amid indications that the economy is rebounding from a weak first quarter.
Later in the day, the U.S. was to release data on factory orders for April. Market players are also looking ahead to the nonfarm payrolls report due later this week.
Meanwhile, Prime Minister Alexis Tsipras said Tuesday that Greece submitted a “comprehensive proposal” to its lenders late Monday and added that a decision on an agreement now rested on European political leaders.
Greece is due to make a €305 million payment to the International Monetary Fund on Friday but warned last month that it will be unable to make the repayment if a deal is not reached by then.
Also on the Comex, silver futures for July delivery dipped 3.2 cents, or 0.19%, to trade at $16.64 a troy ounce. Silver shed 2.1 cents, or 0.13%, on Monday to end at $16.68 after hitting a daily peak of $17.17, a level not seen since May 26.
Elsewhere in metals trading, copper for July delivery inched up 0.4 cents, or 0.16%, to trade at $2.724 a pound. On Monday, prices slumped to $2.710, the lowest since April 24, before closing at $2.720, down 0.8 cents, or 0.29%.
A pair of mostly downbeat reports on China's manufacturing sector on Monday underlined speculation policymakers will have to introduce further easing measures to jumpstart the economy amid lackluster growth.
Since November, the People's Bank of China has introduced a series of stimulus measures, including lowering interest rates three times and cutting the reserve requirement ratios of major banks twice, in order to spur economic activity and boost growth.
The Asian nation is the world’s largest copper consumer, accounting for almost 40% of world consumption last year.