Gold (XAU/USD) weakened on Tuesday after briefly surging to an all-time high of $3,508 per ounce during the Asian session as a rebound in the US dollar and Treasury yields triggered mild profit-taking.

At the time of writing, the precious metal was trading near $3,485 in the early American session, extending its six-day winning streak. Despite the brief correction, demand remained strong, driven by safe-haven asset flows and expectations that the Federal Reserve (Fed) will cut interest rates at its September 16-17 monetary policy meeting.

The precious metal's rally to record highs was driven by the continued weakness of the greenback, concerns over the Fed's independence following political criticism, and rising geopolitical risks. Uncertainty over global trade policy, particularly regarding US tariffs, has also increased demand for gold as a hedge against economic and political instability. Investors continue to favor bullion amid growth risks and the prospect of monetary easing dominating the outlook.

Looking ahead, attention will be focused on the US ISM Manufacturing Purchasing Managers' Index (PMI) for August, due for release later Tuesday. The index is expected to edge up to 49.0 from 48.0 in July, although it will remain below the 50-point threshold, signaling continued contraction in the manufacturing sector.

While this report is not a key Fed policy benchmark, it often provides timely insights into demand conditions and price pressures. A weaker figure would likely reinforce expectations of a September rate cut, which would support gold, while a stronger figure could further strengthen the US dollar and Treasury yields, thereby dampening bullion price gains in the near term. (alg)

Source: FXstreet