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Gold inches up amid Shanghai rally, but remains near 5 1/2 year lows


on — Gold futures inched up amid a slightly lower dollar on Tuesday, as Chinese equities rallied from fresh three-week lows after regulators introduced new stimulus measures aimed at curbing short selling in an effort to reduce volatility in the domestic stock markets.

On the New York Mercantile Exchange, gold for December delivery wavered between $1,080.30 and $1,093.90 an ounce before settling at 1,091.80, up 2.40 or 0.22% on the session. With Tuesday's modest gains, gold halted a brief two-day losing streak. Since crashing down to five and a half year lows near $1,075 an ounce on July 24, have remained relatively flat.

Gold likely gained support at $1,079.20, the low from July 31 and was met with resistance at $1,104.90, the high from July 27.

In China, the soared more than 3% on Tuesday as a flurry of late trading doubled previous gains on the session. The last-minute, frenzied trading came after Chinese regulators introduced new measures meant to discourage short-sellers from attempting to profit on hourly fluctuations in the equity markets. Under the new rules introduced by the Shanghai index, as well as the Shenzhen Exchange short sellers will have to wait at least a day to cover their positions and pay back loans. Previously, the traders were allowed to cover their positions on the same day in which a trade was executed.

In recent weeks, Chinese equities markets have suffered a dramatic fall amid a liquidity shortfall and the nation's slowest period of economic growth in more than a decade. By some estimates, Chinese stocks have lost more than $2 trillion in value since mid-June.

China is the world's largest producer of gold and the second-largest consumer of the precious metal behind India. The Asian nation is also the world's largest consumer of , accounting for more than 40% of the world's global consumption.

In the U.S., for the month of June rose 1.8%, just above analysts' expectations for a 1.7% gain. A surge in civilian aircraft orders by more than 60% on a monthly basis, as well as increases in furniture and automobile orders helped bolster the overall reading. In May, factory orders declined by 1.0% on a month-over-month basis as aircraft orders fell by 32% in comparison with its April level.

The , which measures the strength of the greenback versus a basket of six other major currencies, fell to an intraday low of 97.31, before ticking up to 97.51, down 0.09% on the session.

Dollar-denominated commodities such as gold become more expensive for foreign purchasers when the dollar appreciates.

Investors await Friday's critical U.S. jobs report for the month of July for further indications on the strength on the labor market and economy. Last week, the Federal Open Market Committee (FOMC) said in its July monetary policy statement that the economy showed signs of growing moderately during the second quarter of the year.

The Federal Reserve would still like to see significant improvements in the economy and labor market, as well as signals that long-term inflations is moving toward its targeted goal of 2% before it hikes short-term interest rates for the first time in nearly a decade. Despite a relatively dovish statement from the FOMC, many traders believe the Fed could raise rates during its September meeting.

A rate hike is viewed as bearish for gold, which is unattached to interest rates and struggles to compete with high-yield bearing assets in rising rate environments.

Silver for September delivery gained 0.075 or 0.52% to 14.590 an ounce.

Copper for September delivery rose 0.016 or 0.69% to 2.362 a pound.

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