Gold futures rallied on Tuesday as the first contraction in the U.S. Institute for Supply Management's manufacturing index in nearly three years fed worries about the economy, boosting demand for haven gold.

ISM’s manufacturing index fell to 49.1% in August from 51.2% in July. Any reading below 50% indicates worsening conditions. "This should give further justification towards [a Federal Open Market Committee] rate cut, anticipated in September," said Jeff Wright, executive vice president of GoldMining Inc.

December gold rose $26.50, or 1.7%, to settle at $1,555.90 an ounce. That was the highest finish since April 2013, according to FactSet data.

Source : MarketWatch