Gold set to gain for a third session - the longest streak in a month; U.S. data disappoints

Gold futures were edging higher on Tuesday and eyeing a third day of gains as the precious metal shrugged off a recent rally in global stock markets to focus on hopes that benchmark interest rates will be lower for longer. Meanwhile, S&P 500 opened lower Tuesday.

December gold futures were 0.95%, higher at $1,148.40 an ounce, after posting a second session of gains Monday.

December silver climbed 1.54%, to trade at $15.95 an ounce.

The yellow metal was supported by dull economic data, headlined by a weak jobs report last Friday.

Gold gains gathered steam in early Tuesday trade after a report showed that the U.S. trade deficit jumped almost 16% in August to $48.3 billion due to a relatively stronger dollar, the Commerce Department said.

Overall exports fell 2% to their lowest level since October 2012. Imports rose 1.2%, even though America bought the least petroleum from abroad since September 2004.

The data illustrates the U.S. economy's vulnerabilities to a strong dollar and weak demand in foreign markets, which could impose further caution on the Federal Reserve's plans to hike interest rates.

The dollar slipped lower on the news with EUR/USD up 0.25% to 1.1217, GBP/USD higher 0.32% to 1.5194.

After two sessions of solid gains, stock trading looked more subdued Tuesday, which could add to gold appetite. S&P 500 opened 2 points, or 0.1%, lower at 1,985. The Dow Jones Industrial Average also opened lower, but within minutes was up 25 points, or 0.2%, at 16,803. The Nasdaq Composite began the day down 6 points, or 0.1%, at 4,775.

“The precious metal is therefore displaying some bullish [characteristics] and may be able to extend its gains further if the dollar and to a lesser degree stocks retreat from their current levels this week,” said Fawad Razaqzada, analyst at Forex.com in a Tuesday research note.

However, Razaqzada said the lack of global inflation and low physical demand, could be impediments for gold.

“For these reasons I remain [skeptical] about whether this latest bounce will transform into a sustained rally,” he said.