Gold Rises on Strong Euro

Spot gold is trading slightly higher early Tuesday, tracking a stronger euro, but analysts predict there may be further consolidation ahead as investors pare their stale longs.

Spot gold was at $1,210.55 a troy ounce, up $2. Silver is also up, rising 10 cents to $17.86 an ounce.

Following a quiet day of trading Monday, where prices kept within an $8 range, the markets are expected to closely watch how Wall Street opens Tuesday after the U.S.'s July 4 holiday break.

"Gold [is] holding above $1,200 a troy ounce; however, the lack of gains in European markets yesterday may suggest the negative sentiment will continue when U.S. markets reopen, with further consolidation likely in gold as investors and speculators par their stale longs," said Bullion Desk analyst James Moore.

Traders will also be awaiting the U.S. Institute for Supply Management's non-manufacturing data, due at 2 p.m. GMT, for direction.

Daniel Major, a metals analyst at RBS in London, said: "The ISM figures are likely to impact on sentiment and the markets will probably take their lead from that." He said gains so far Tuesday have been made on the back of a stronger euro.

The euro was trading at $1.2583, up from $1.2488.

Other precious metals are also up, with platinum at $1,517 an ounce, up $13 and palladium at $436 an ounce, $8 higher.

In a note Tuesday, Commerzbank said platinum and palladium had been under pressure in recent weeks, and that worse-than-expected car sales figures in China "could keep this trend going."

"Although nearly 11% more cars were sold in June, year-on-year, this is a good 5% less than the previous month," it said.

"Platinum and palladium are mainly used to manufacture autocatalysts. If China's car industry cools on a lasting basis, this would thus have a dampening effect on platinum and palladium prices."