By Gina Lee

Investing.com – Gold was up on Tuesday morning in Asia building on its gains as the dollar weakened to its lowest levels in years.

Gold futures were up 0.86% at $1,995.70 by 12: 35 AM ET (5:35 GMT).

The dollar slumped to its lowest level since May 2018, in the aftermath of U.S. Federal Reserve Vice Chairman Richard Clarida expanding on the Fed’s policy shift on inflation announced last week by Fed Chair Jerome Powell. The wider scope for the Fed to keep benchmark rates lower for longer saw investors retreating from the greenback.

Meanwhile, data released in China and Japan pointed to steady economic recoveries in both countries. China’s Caixin manufacturing Purchasing Managers’ Index (PMI) for August rose to 53.1 and Japan’s manufacturing Purchasing Managers’ Index (PMI) saw an increase to 47.2 in August. Although Japan’s figure was below the 50-mark indicating economic expansion, it was the index’s slowest contraction since February.

Investors are also keeping an eye on increasing tensions between China and the U.S., as well as Australia. Tensions with the U.S. mounted after the U.S. said on Monday that it was establishing a new bilateral economic dialogue with the country, whilst tensions with Australia mounted in the aftermath of the Chinese authorities’ detention of Australian news anchor Cheng Lei in late August.

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