Gold rises against softer dollar

Gold prices increased on Tuesday, buoyed by a pullback in the dollar and safe-haven buying due to economic slowdown concerns. Although prospects of aggressive rate hikes capped further gains.

Spot gold increased 0.5 percent to $1,718.21 per ounce, as of 0120 GMT.

U.S. gold futures gained 0.5 percent to $1,731.30.

The dollar index declined 0.2 percent after touching a 20-year peak in the previous session.

The euro zone is almost certainly entering a recession, with surveys on Monday showing a deepening cost of living crisis and a gloomy outlook that is keeping consumers wary of spending.

The European Central Bank faces the prospect of increasing interest rates aggressively when it meets on Sept. 8 just as the economy enters a downturn.

Moreover, further gains in gold were limited by expectations that the U.S. Federal Reserve could deliver another hefty interest rate increase in its fight against inflation during its Sept. 20-21 policy meet.