By Polya Lesova and Chris Oliver, MarketWatch
NEW YORK (MarketWatch) — Gold prices fell Tuesday, as the U.S. dollar gained against other major currencies after worries about Spain’s debt woes outweighed encouraging data on China’s manufacturing activity.
Gold for August delivery GCQ2 +0.16% dropped $3.50, or 0.2%, 1,573.90 an ounce on the New York Mercantile Exchange. The contract on Monday finished down $5.40, or 0.3%, to $1,577.40 an ounce.
Gold’s decline came as the dollar rose. Strength in the greenback often pressures dollar-denominated commodities such as gold and oil, because it makes them more expensive for holders of other currencies.
The dollar index DXY +0.02% , which tracks the performance of the greenback against a basket of other major currencies, gained 0.2% to 83.891. The euro fell 0.3% to $1.2078, pressured by concerns that Spain may need a full-fledged sovereign bailout. The country has already requested financial aid for its banking system.
In economic news, a preliminary July survey of Chinese manufacturing conditions released Tuesday by HSBC showed overall activity at its strongest level in five months. See: China’s factory gauge hits strongest level in months
Qinwei Wang, a London-based analyst with Capital Economic, singled out the subcomponents of the PMI for output and new orders as among data points that showed “the improvements were broadly based.”
He also noted that input and output prices ticked higher but leeway remains for policy makers to pursue further easing this year.
In other precious-metals trading, silver for September delivery SIU2 -0.10% dropped 24 cents, or nearly 1%, to $26.81 an ounce.
Polya Lesova is MarketWatch's New York deputy bureau chief.
Chris Oliver is MarketWatch's Asia bureau chief, based in Hong Kong.
