As investors sought refuge from the economic unrest and prepared for the U.S. inflation report to provide clues about the direction of interest rates, gold prices rose on Tuesday.
U.S. gold futures closed 0.5% higher at $2,042.90, while spot gold in the US market increased by 0.8% to $2,036.56 per ounce.
Gold price rises as markets seek risk safety amid fears of a US default, especially after the first rounds of protracted debt ceiling negotiations among US politicians come to a standstill.
China‘s admission that manufacturing activity had stalled was another factor that increased demand for gold. Exports and imports decreased from 14.8% to 8.5% in April and from -1.4% to -7.9%, respectively, according to the trade balance for the month.