Dollar scales more than threemonth peak
China39;s August services activity slows amid sluggish demand
Investors await comment by Fed officials for rate cues

Sept 5 Reuters Gold slipped to a oneweek low on Tuesday as investors sought the U.S. dollar after weak data in China, although rising expectations for a pause in interest rate increases by the U.S. Federal Reserve limited losses.

Spot gold declined 0.4 to 1,930.33 per ounce by 1126 GMT, eyeing its biggest daily drop since midAugust. U.S. gold futures fell 0.6 to 1,955.80.

Making gold more expensive for other currency holders, the dollar gained 0.5 to a more than threemonth high after data showed China39;s services activity expanded at the slowest pace in eight months in August.

However, the drop in the price of gold was limited by hopes that interest rate increases may be ending.

The expectation for a dovish Fed in September is capping the downside for gold, said Carlo Alberto De Casa, market analyst at Kinesis Money.

Recent U.S. economic data has backed bets of a soft landing as worries about inflation and recession have eased, cementing expectations that the Fed might not have to raise interest rates further.

According to the CME FedWatch tool, traders see a 93 chance of the Fed leaving rates unchanged at a Sept. 1920 policy meeting, and about a 60 chance that rates would remain at current levels for the rest of the year.

Gold, which yields no interest, tends to lose its attraction when interest rates…