Gold bounces in cautious trade

Gold bounced in cautious trade on Thursday after falling more than 1 percent in New York, while Tokyo futures tracked losses in New York and traded below two-week highs hit the previous day. Other precious metals were mixed, with a late rebound in Japanese platinum futures spurring gains in the cash price.
Spot platinum had rallied to its highest in nearly two weeks on Wednesday on supply concerns. Spot gold rose to 655.10/656.60 dollars an ounce from 650.50/657.00 dollars late in New York on Wednesday, when it dropped around $10 due to falling oil prices.
"The market now looks reluctant to chase gold above 660 dollars and platinum above 1,290 dollars ahead of the FOMC meeting," said Shuji Sugata, manager at Mitsubishi Corp Futures and Securities Ltd. "Many players are unwinding to lighten their positions after prices failed to break through those levels this week," said Sugata, who expects gold to find solid support around 650 dollars.
The United States Federal Reserve's Federal Open Market Committee begins a two-day meeting on interest rates on June 27. Gold was likely to trade in a range, with 640 dollars an ounce providing crucial support, said Ronald Leung, director of Lee Cheong Gold Dealers in Hong Kong. "I would say investors are still on the sidelines.
If we break below 640 dollars, there will be more liquidation," said Lunge, referring to a possible drop to a January level of 626 dollars an ounce. April 2008 gold futures on the Tokyo Commodity Exchange ended 13 yen per gram lower at 2,631 yen, having rallied to they're highest in nearly two weeks to 2,649 yen on Wednesday.
Gold would watch movements in currencies and oil markets for direction but investors would remain reluctant to buy after the metal's attempt to match a near two-week high of 661.40 dollars hit this week was met by profit taking.
The metal hit an intrude high of 661.35 dollars on Wednesday before selling pressure emerged. Traders said gold barely reacted to news that South African trade unions had declared a dispute, the first legal step towards a strike, after the country's three biggest gold producers failed to submit a wage offer on Wednesday.
South Africa, the world's biggest gold producer, was hit in 2005 by the first industry-wide strike in 18 years, paralysing production for five days.
Gold hit a 26-year high at 730 dollars in May 2006 as investors diversified their portfolios on Middle East tensions, record-high oil prices that raised fears of inflation as well as uncertainties in the United States dollar's outlook.
It hit a record high of 850 dollars an ounce in 1980. The yen held near a 4-1/2-year low versus the dollar with investors using the currency to buy higher-yielding units such as the New Zealand dollar in carry trades.
The dollar edged up to 123.63 yen and just off a peak of 123.76 yen hit in the week on electronic trading platform EBS, the highest since December 2002. The euro inched down to 1.3390 dollars. Silver inched down to 13.20/13.24 dollars an ounce from 13.21/13.25 dollars late in New York.
Platinum rose to 1,291/1,296 dollars an ounce from 1,290/1,294 dollars an ounce late in New York after hitting an intrude low of 1,282 dollars. The metal rallied to its highest in nearly two weeks at 1,295 dollars on Wednesday on supply concerns.
The most active Tokyo platinum futures contract, currently April 2008 hit a low of 5,047 yen before ending 4 yen per gram higher at 5,089 yen, within sight of a record high of 5,099 yen hit on Tuesday.
The contract hit new record highs twice this week on the back of supply concerns after Angloplat, the world's biggest platinum producer, said on Monday it would close its biggest mine for up to seven days due to safety concerns. Palladium dipped to 372/377 dollars an ounce from 373/377 dollars an ounce.