Gold jumped for a second straight session on Tuesday, bolstered by safe-haven demand after weak Chinese data stoked concerns over the global economy, with the volume of assets in the top bullion fund climbing to the highest since 2014. Spot gold had gained 0.7 per cent to $1,246.35 an ounce by 0228 GMT, after rising 1.3 per cent in the previous session. US gold futures rose over 1 per cent to $1,249.30.

Data on Tuesday showed activity in China's manufacturing sector shrank for the seventh month in a row in February, while the country's factories shed jobs at the fastest rate in seven years last month.

The data followed an overnight move by the Chinese central bank to cut the reserve requirement ratio and resume its easing cycle.

"Weak data globally is adding to concerns over a slowdown and that is helping gold," said a bullion trader in Hong Kong, adding that more inflows into gold-backed exchange traded funds (ETFs) were also helping.

Gold is biased to edge up to key resistance at $1,260, the metal's one-year peak hit last month, said Reuters technical analyst Wang Tao.

Gold, which logged its best month in four years in February with a 10.8-per cent gain, has been one of the best performing assets this year amid turmoil in the wider markets.

Downbeat US data on Monday revived concerns about the strength of the economy. Contracts to buy previously owned US homes fell to their lowest level in a year in January, while the Chicago Purchasing Manager Index - a leading indicator of the US economy - contracted to 47.6 in February.

Global economic concerns have prompted investors to channel money into gold.

Assets of SPDR Gold Trust, the world's top gold ETF, rose 1.95 per cent to 777.27 tonnes on Monday, the highest since September 2014. The asset increase in the fund so far this year is the highest since 2010.

In the physical markets, however, buying remained muted. The price rally overnight prompted the Chinese, the top consumers of gold, to sell the metal on Tuesday, said the Hong Kong-based trader.

"They were buyers when prices were around $1,230 but the rally has put an end to that," he said.

India, the No.2 gold consumer, has reintroduced a local sales tax on gold jewellery after a gap of four years, on top of record import duty, in a move officials hope will dampen demand for the precious metal. Indian jewellers will go on indefinite strike from Tuesday in protest over the reintroduction of the sales tax.

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