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Gold gains on coattails of U.S. stocks as solid data bolsters

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Investing.com - Gold prices rose on Tuesday chasing U.S. stocks that hit record highs earlier after U.S. service-sector data came in much better than expected.

Gold also saw gains on market sentiment that the Federal Reserve won't rush to unwind monetary stimulus programs currently in place.

Monetary stimulus tools weaken paper currencies to spur recovery, which makes gold an attractive hedge, especially when the U.S. dollar slides.

On the Comex division of the New York Mercantile Exchange, gold futures for April delivery were up 0.06% at USD1,573.40 a troy ounce in U.S. trading on Tuesday, up from a session low of USD1,572.70 and down from a high of USD1,585.60 a troy ounce.

Gold futures were likely to test support USD1,568.80 a troy ounce, Monday's low, and resistance at USD1,619.40, last Tuesday's high.

In the U.S. earlier, the Institute for Supply Management said its February non-manufacturing purchasing managers' index rose to 56.0 from 55.2 in January, beating analysts' calls for the index to fall to 55.0 last month.

The news sparked a rally in U.S. stock markets, which saw record highs earlier and brought gold prices up with them, especially when coupled with sentiments that the Federal Reserve will keep policy loose in the near future.

The Fed is currently running a USD85 billion monthly bond-buying program, a stimulus tool known as quantitative easing that spurs the economy by flooding it with liquidity, which pushes up gold prices and weakens the dollar as side effects.

Other central banks have carried out similar measures, and may continue to do so in the near future.

Elsewhere in Europe, Germany's services PMI rose to 54.7 in February, beating market calls for a 54.1 reading, according to Markit Economics.

A eurozone services PMI hit 47.9 compared with consensus forecasts for a 47.3 reading.

Elsewhere, official data released earlier revealed that eurozone retail sales rose by 1.2% in January, well above expectations for a 0.2% gain.

Elsewhere on the Comex, silver for May delivery was up 0.48% and trading at USD28.633 a troy ounce, while copper for May delivery was up 0.51% and trading at USD3.519 a pound.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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