Investing.com - Gold prices inched higher in European trade on Tuesday, trying for its fifth-straight winning session as signs of slowing economic activity in the U.S. saw investors temper expectations for more rate hikes by the Federal Reserve.
Comex gold futures rose around $5.00, or about 0.4%, to $1,235.10 a troy ounce by 2:50AM ET (06:50GMT). Meanwhile, spot gold was at $1,235.30.
The yellow metal notched a fourth-straight winning session on Monday after rising to its highest since May 4 at $1,237.40, following the release of underwhelming U.S. manufacturing data.
The New York Federal Reserve's index of manufacturing conditions contracted for the first time in seven months in May, as new orders and shipments turned negative.
The NY Fed said on Monday that its general business conditions index fell to -1.0 this month from a reading of 5.2 in April. Analysts had expected the index to inch up to 7.0 in May.
On the index, a reading above 0.0 indicates improving conditions, below indicates worsening conditions.
Later on Tuesday, the precious metal could take cues from U.S. data on housing starts and building permits, as well as industrial production figures, as investors look for further indications on the health of the world's largest economy.
Markets are pricing in around a 74% chance of a hike at the Fed's June meeting, according to Investing.com's Fed Rate Monitor Tool, down from more than 80% in previous week.
The precious metal is sensitive to moves in U.S. rates, which lift the opportunity cost of holding non-yielding assets such as bullion.
A gradual path to higher rates is seen as less of a threat to gold prices than a swift series of increases.
The dollar index, which tracks the greenback against a basket of six major currencies, slipped to a more than one-week low of 98.53 in London morning trade.
Meanwhile, investors were also mulling the potential economic policy impact of a Washington Post report that U.S. President Donald Trump divulged highly classified information during his meeting with Russian officials last week.
Market participants were also keeping a wary eye on developments in North Korea, which successfully conducted a newly developed mid-to-long range missile test on Sunday aimed at verifying the capability to carry a "large scale heavy nuclear warhead."
The United Nations Security Council is due to meet on Tuesday to discuss North Korea's latest missile launch, which was requested by the U.S. and allies South Korea and Japan.
Also on the Comex, silver futures gained 12.5 cents, or about 0.8%, to $16.72 a troy ounce.
Elsewhere in metals trading, platinum tacked on 0.8% to $935.80, while palladium added 0.3% to $799.30 an ounce.
Copper futures dipped 1.1 cents to $2.528 a pound.
Industrial metals rallied on Monday after Chinese President Xi Jinping pledged $124 billion in fresh financing to support its "Belt and Road" infrastructure mega-program.