(Adds comments, updates prices)
* U.S. manufacturing activity at near 2-year high in August
* Silver rises to three-week high
* Interactive graphic tracking global spread of coronavirus: open https://tmsnrt.rs/3aIRuz7 in an external browser
By K. Sathya Narayanan
Sept 1 (Reuters) - Gold prices fell from a near two-week high scaled earlier on Tuesday, as the dollar rebounded and better-than-expected U.S. manufacturing data improved hopes about a U.S. economic recovery.
Spot gold XAU= was steady at $1,970.55 per ounce by 2:23 p.m. EDT (1823 GMT), after hitting its highest since Aug. 19 at $1,991.91.
U.S. gold futures GCv1 settled mostly flat at 1,978.90.
"The manufacturing number came out much better than expected and that's what caused gold to pare back its gains, and (also) gave little strength to the dollar," Bob Haberkorn, senior market strategist at RJO Futures said.
The U.S. dollar .DXY was up 0.2% against key rivals, recovering from a more than two-year low hit earlier in the day. USD/
Also, weighing on prices, global stocks gained after U.S. manufacturing activity accelerated to its highest level in nearly two years in August, the Institute for Supply Management (ISM) data showed. MKTS/GLOB
"(The better data) doesn't necessarily change the picture for the U.S. Federal Reserve. The trend (in gold) is still higher," Haberkorn, however added.
The U.S. central bank last week announced an average inflation target policy, which will allow rates to stay low even if inflation rises a bit in the future. should remain supported in this environment of firming inflation expectations and a lower U.S. dollar, said Daniel Ghali, commodity strategist at TD Securities.
Bullion, which has risen about 30% so far this year, is seen as a hedge against inflation and currency debasement, while lower interest rates reduce the opportunity cost of holding non-yielding bullion.
Elsewhere, silver XAG= was up 0.2% at $28.27 per ounce, after hitting its highest since Aug. 11.
Platinum XPT= rose 1.4% to $942.09 and palladium XPD= climbed 1.5% to $2,277.11.
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https://tmsnrt.rs/3hSPbMY Gold's rally in 2020
https://tmsnrt.rs/3lDrv1r
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