Investing.com - Gold gave up early gains in Asia on Tuesday as the dollar gained further and data sets from Japan showed noted improvement as investors looked ahead to nonfarm payroll figures in the U.S. at the end of the week for a clearer view of a possible Fed rate hike this year.
Gold for December delivery on the Comex division of the New York Mercantile Exchange fell 0.06% to $1,326.255 a troy ounce. Silver futures on the Comex were nearly steady at $18.770 a troy ounce, while copper futures gained 0.29% to $2.090 a pound.
In Japan, household spending fell 0.05% in July year-on-year, less than the 0.9% decline expected, and gained 2.5% month-on-month, beating the 1.1% increase seen. The unemployment rate fell to 3.0%, below the expected 3.1% level seen.
Also in Japan, retail sales dipped 0.2% in July month-on-month, compared with a 0.9% drop expected.
Overnight, gold prices held on to overnight losses in North American hours on Monday, trading at five-week lows after senior Federal Reserve officials indicated a U.S. interest rate increase was on the cards in the near term.
Odds for an interest rate hike from the Federal Reserve in the coming months spiked after Fed Chair Janet Yellen said Friday that the case for an increase was strengthening, while Vice Chairman Stanley Fischer indicated a tightening is possible at the next review in September.
According to Investing.com's Fed Rate Monitor Tool, investors are currently pricing in a 24% chance of a rate hike by September, up from 21% before Yellen and Fischer spoke.
The precious metal is sensitive to moves in U.S. rates, which lift the opportunity cost of holding non-yielding assets such as bullion, while boosting the dollar in which it is priced.
A stronger U.S. dollar usually weighs on gold, as it dampens the metal's appeal as an alternative asset and makes dollar-priced commodities more expensive for holders of other currencies.
Investors will be keeping an eye on upcoming U.S. data to gauge if the world's largest economy is strong enough to withstand a rise in borrowing costs in the weeks ahead. The Commerce Department said in a report Monday that the core PCE price index inched up 0.1% last month, matching expectations. On an annualized basis, core PCE prices rose 1.6%, broadly in line with forecasts.
The Federal Reserve uses core PCE as a tool to help determine whether to raise or lower interest rates, with the aim of keeping inflation at a rate of 2% or below.
The report also showed that personal spending increased by 0.3% last month, while personal income advanced 0.4%.