Gold turned higher on Tuesday after plunging below $840 in early trading. February gold finished at $866.20, up $8.40 on the day. The metal hit a 12-day low of $838.80 earlier in the day.
The dollar gave back most of its early gains versus the euro and lost significant ground versus the sterling on Tuesday as traders weighed a trio of mixed US economic data. Gold usually moves opposite the dollar as traders tend to turn to the precious metal as a hedge investment.
The buck pulled back after hitting a monthly high against the yen. Versus the euro, the dollar surged to a 3-week high of 1.3311 in Tuesday's early dealing, but dropped back nearly 2 cents to trade near 1.3500 by mid-afternoon.
the Institute for Supply Management released its December report on activity in the services sector. The index of activity in the sector rose notably to 40.6, while analysts expected a slight decline to 37.0 from a record low reading of 37.3 in November.
At the same time, the government issued its report on November factory orders, showing a decline of 4.6 percent following a revised 6.0 percent decrease in October. Factory orders were expected to decline 2.6 percent in November.
Similarly, weakness was also seen in the pending home sales report that was released by the National Association of Realtors. Pending home sales fell by 4 percent in November after a decline of 0.7 percent in October. Analysts expected pending sales to have fallen 1.0 percent.
The price of gold had plunged on Monday as the U.S. dollar gained on other majors. Gold for February delivery ended at $857.80, down $21.70 for the day. Prices hit as low as $843.50. Gold lost $4.80 on Friday.
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