A one kilo Swiss gold bar and US dollars gold coins are pictured in Paris on February 20, 2020.

JOEL SAGET | AFP | Getty Images

Gold prices rose back towards the previous sessions four-week high on Tuesday, supported by a weaker dollar and a fall in U.S. Treasury yields, as investors awaited August U.S. non-farm payrolls data due later this week.

Fundamentals

Spot gold was up 0.3% at $1,815.11 per ounce by 0848 GMT, after hitting its highest since Aug. 4 on Monday at $1,822.92.

U.S. gold futures U.S. gold futures rose 0.3% to $1,817.20.

We have tailwinds from the dollar, which has weakened further, and softer yields. But against that the gold market has struggled to challenge a key area of resistance around $1,830-$1,835/oz, Saxo Bank analyst Ole Hansen said.

Also, the continued rally in global stocks has reduced the need for diversification, which is acting as a counter to supportive factors like a weaker dollar and yields.

Making gold less expensive for other currency holders, the dollar index slipped to a more than three-week low. The benchmark U.S. 10-year yield fell to a one-week low.

Meanwhile, European stocks were en route for their seventh straight month of gains, as hopes for more policy support overshadowed economic risks from a surge in COVID-19 cases. 

Following dovish remarks from Federal Reserve chief Jerome Powell at the Jackson Hole symposium last week, the spotlight shifts to Fridays U.S. jobs report, which could shed more light on the Feds tapering strategy.

The market is expecting an increase of 728,000 jobs, unemployment to fall to 5.2% from 5.4%, and average hourly earnings to rise 0.4% month-on-month.

In case of disappointing jobs numbers gold could break above recent highs, and then even $1,900 is possible, said Hareesh V, head of commodity research at Geojit Financial Services.

Elsewhere, silver gained 0.1% to $24.09 per ounce, but was headed for a third straight month of declines, down 5.3%.

Platinum rose 0.3% to $1,009.16 and was on track for a fourth consecutive monthly loss, sliding 3.9%.

Palladium slipped 0.4% to $2,484 and was headed for its worst monthly performance in seven months, falling 6.6%.

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