PRECIOUS-Gold, silver surge after weak U.S. data compounds slowdown fears

* U.S. manufacturing activity contracts for first time in 3
years
* Silver surges over 3% to near 3-year peak, breaches $19/oz
level
* British lawmakers bid to stop no-deal Brexit

(Updates prices)
By Asha Sistla
Sept 3 (Reuters) - Gold rose more than 1% on Tuesday after
weak manufacturing data from the United States reinforced fears
of an economic downturn, while uncertainties over U.S.-China
trade ties and Brexit further boosted bullion's safe-haven
appeal.
Meanwhile, silver XAG= followed gold's rally and rose 3.7%
while breaching the $19 mark for the first time since October
2016 at $19.14 per ounce.
Spot gold XAU= rose 1% to $1,546.30 per ounce at 1:35 p.m.
EDT (1734 GMT), not far off its more than six-year high of
$1,554.56.
U.S. gold futures GCcv1 settled up 1.7% to $1,555.90.
Renewing fears of a sharp economic slowdown and weighing on
risk sentiment, U.S. manufacturing activity contracted for the
first time in three years in August. MKTS/GLOB
Weak manufacturing data "will further embolden the view that
the U.S. Federal Reserve is going to need to be aggressive with
rate cuts," said Ryan McKay, a commodity strategist at TD
Securities.
"Equities are on the back foot, that's what's keeping gold
higher. There's a lot of uncertainty on the Brexit front,
politics in Italy, protests in Hong Kong as well - a lot of
stuff that's positive for gold."
Gold also shook off mild pressure from the dollar earlier in
the session, with the U.S. unit holding gains versus other major
currencies. USD/
"Dollar is also being seen as a safe-haven asset ... Even
Treasuries are up, dollar is up, silver is up, gold is up - it's
all the safe-haven assets up together," said Phillip Streible,
senior commodities strategist at RJO Futures.
Meanwhile, European currencies such as the euro and pound
have dipped against the dollar as traders remain wary of
developments surrounding Britain's potentially imminent exit
from the European Union and Italy's political turmoil.
In Britain, lawmakers began a bid to stop Prime Minister
Boris Johnson from pursuing a no-deal Brexit. On the trade front, China has lodged a complaint at the
World Trade Organization over U.S. import duties, trashing the
latest tariff actions as violating the consensus reached by
leaders of both countries at a meeting in Osaka. "Gold has aggressively priced in Fed rate cuts. With little
opportunity cost in holding gold and growing economic
uncertainty tied to escalating U.S.-China trade tensions,
investor appetite for the yellow metal has grown," BNP Paribas
analysts wrote in a note, forecasting average gold prices to
climb above $1,600 driven by the Fed's monetary easing cycle.
Federal fund futures FEDWATCH implied traders saw a 91%
chance of a 25 basis-point rate cut by the U.S. Federal Reserve
this month.
Meanwhile, platinum XPT= rose 2.3% to $951.35 per ounce
after reaching $956.99, its highest since March 2018. Palladium
XPD= was up 0.2% at $1,533.70 per ounce.