* MSCI Asia-Pacific index falls more than 1.5 pct
* Market awaits Fed Chair’s speech later on Tuesday (Updates prices, adds quotes)
By Vijaykumar Vedala
BENGALURU, Oct 2 (Reuters) - Gold prices rebounded on Tuesday as risk appetite faded after getting a boost from an agreement between the United States and Canada to salvage a North American free trade deal.
Asian stocks fell, with MSCI’s broadest index of Asia-Pacific shares outside Japan declining more than 1.5 percent after a steady start, as cautious views on the global economy curbed risk sentiment.
Spot gold was up 0.5 percent at $1,193.80 as of 0748 GMT, after declining about 0.3 percent in the previous session. U.S. gold futures were 0.5 percent higher at $1,197.60 an ounce.
“Gold has been nudging higher as risk has been trading a bit unsettled in Asia,” said Stephen Innes, APAC trading head at OANDA in Singapore.
Optimism surrounding a last-minute deal between the United States and Canada on Sunday to salvage NAFTA as a trilateral pact with Mexico, had increased the appetite for riskier assets on Monday.
However, growth in factory activity slowed across Europe and Asia in September, with export orders weakening before the latest escalation in the U.S.-China trade conflict, data showed.
There was some demand from speculators and physical buyers with prices hovering around $1,190 an ounce earlier in the session, according to Peter Fung, head of dealing at Wing Fung Precious Metals in Hong Kong.
Gold has fallen about 13 percent from its April high, largely because of the stronger dollar, which has been boosted by a vibrant U.S. economy and fears of a global trade war.
“I don’t see the U.S. dollar doing much ahead of Friday’s non-farm payroll data. I look for that key print to drive the pace of the U.S. Federal Reserve repricing rates higher, which I think will boost the dollar’s appeal,” Innes said.
Market participants will also be watching out for any additional cues on the pace of interest rate hikes from Fed Chairman Jerome Powell who will be speaking on “The Outlook for Employment and Inflation” before the National Association for Business Economics later in the day.
The Fed raised rates last week and said it planned four more increases by the end of 2019 and another in 2020, citing steady economic growth and a robust jobs market.
Meanwhile, holdings in the world’s largest gold-backed exchange-traded fund, SPDR Gold Trust, fell 0.28 percent to 740.17 tonnes on Monday. It has fallen over 4 million ounces since hitting a peak in late April.
Among other precious metals, silver rose 0.9 percent to $14.58 an ounce.
Palladium was down 0.1 percent at $1,055.60, while platinum fell 0.1 percent to $821.0 per ounce. (Reporting by Vijaykumar Vedala and Sumita Layek in Bengaluru; editing by Richard Pullin and Subhranshu Sahu)