Wires

PRECIOUS-Gold edges higher as U.S. data fans slowdown fears

Diptendu Lahiri

(Adds comment, updates prices)

Oct 2 (Reuters) - Gold prices edged up on Wednesday, after rising as much as 1% in the previous session, as disappointing U.S. manufacturing data fanned fears of a sharp global economic slowdown and stoked bets of further interest rate cuts.

Spot gold was up 0.2% to $1,481.76 per ounce at 0736 GMT. Prices hit a near two-month low of $1,458.50 on Tuesday, before climbing as much as 1% during the session.

U.S. gold futures were little changed at $1,488.20 per ounce.

"Considering the risks to the global economy, gold is still a strong safe-haven asset," said Phillip Futures analyst Benjamin Lu.

U.S. manufacturing activity tumbled to a more than 10-year low in September as lingering trade tensions weighed on exports, fanning fears of an economic slowdown and raising expectations that the U.S. Federal Reserve could further ease monetary policy.

But Lu added: "Until and unless Fed gives really strong dovish signals, we will see gold trading around $1,500."

Lower interest rates reduce the opportunity cost of holding non-yielding gold.

The data also prompted President Donald Trump to lash out at the Fed, saying the central bank has kept interest rates "too high," with a strong dollar hurting U.S. factories.

Markets now await U.S. non-farm payrolls data due on Friday to gauge the state of the world's largest economy amid its bitter trade war with China.

"I think the market does not want to rush ahead of the non-farm payroll data in case there is a surprise hit," said AxiTrader market strategist Stephen Innes.

"Investors are bit scared. This emotion will probably inhibit people from jumping back into the (gold) bandwagon over the near term. They are going to need some convincing."

On the technical front, spot gold may consolidate in a narrow range of $1,462-$1,488 per ounce, or bounce towards $1,514, as its short downtrend from the Sept. 4 high of $1,557 could have temporarily ended, according to Reuters analyst Wang Tao.

Among other precious metals, silver was up 0.3% to $17.28 per ounce, platinum was steady at $876.65 per ounce while, palladium edged down 0.4% to $1,645.49 per ounce. (Additional reporting by Karthika Namboothiri in Bengaluru; Editing by Aditya Soni and Raju Gopalakrishnan)