Tokyo gold futures rose to a fresh 13-year high on Monday as the yen weakened after Japan's parliament voted down postal reform bills and ruling coalition officials said Prime Minister Janitor Koizumi would call a snap election.
Politicians and analysts say the prime minister's bitterly divided Liberal Democratic Party, which has governed for most of the past half century, could lose at the polls for the powerful lower house that a coalition partner said would be held on September 11.
The June gold contract on the Tokyo Commodity Exchangefinished up four yen per gram at 1,581 after moving between 1,581 and 1,587 yen the highest for TOCOM's benchmark gold since December 1991, when prices hit a peak of 1,608 yen.
Other months were three to five yen higher at the close. "TOCOM gold will remain buoyant as the yen will stay under pressure amid the political turmoil," a Tokyo broker said, adding that the June contract is set to test the key 1,600-yen mark shortly.
The yen initially eased to 112.55 to the dollar from around 112.35 following the rejection of the postal bills. But it then returned to around 112.40.
Analysts said the political shake-up in Japan could unnerve foreign investors who have bought a net 10.73 trillion-yen ($95.48 billion) of Japanese stocks and bonds so far this year, undermining the yen.
TOCOM gold also drew support from a mineworkers' strike in South Africa, a record-breaking rally in oil prices and geopolitical risks in the Middle East, brokers said.
South African gold miners started their first industry-wide strike in 18 years on Sunday, demanding higher wages in the world's biggest bullion producer, the National Union of Mineworkers, the country's main mining union, said.
A strike would lead to the loss of around 28,000 ounces of gold production and 79 million rand ($12.21 million) in lost revenue per day, a Deutsche Securities analyst has estimated.
The strike would paralyse the South African mines of the world's No 2 gold producer, AngloGold Ashanti, fourth-ranked Gold Fields, sixth-placed Harmony Gold and South Deep, a joint venture of South Africa's Western Areas and Canada's Placer Dome.
US light crude oil struck an all-time high on Monday on worries that a series of US refinery outages could put a strain on oil product supplies as gasoline demand peaks.
Traders were also concerned about geopolitical risks in the Middle East. On Sunday, the US embassy in Saudi Arabia said it was closing all diplomatic missions in the kingdom on Monday and Tuesday due to a threat against US buildings.
Spot gold was quoted at $436.50/437.25 an ounce, down from $437.60/438.30 in late New York on Friday, pressured by the dollar's rise against the euro after upbeat US jobs data.
In the platinum market, TOCOM's benchmark June contract closed down 30 yen per gram at 3,207. Profit taking gathered pace after the market surged last week to a near 19-year high in a technical, fund-led rally.
On Wednesday the June contract rallied to 3,254 yen, the highest for TOCOM's benchmark platinum since September 1986, when prices marked a high of 3,520 yen.
Spot platinum was quoted at $899/904 an ounce, down from $908/911 in late New York.
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