Key TOCOM rubber futures edged higher to mark the third weekly gain in a row on Friday as rallies in oil and share prices and strong US car sales fuelled optimism over global demand. But caution that the market had rallied too far too fast kept investors from buying further above a five-month high of 344.4 yen per kg marked on February 27.
The key Commodity Exchange rubber contract for August delivery settled at 341.9 yen per kg, up 2.7 yen per kg, or 0.8 percent, from the previous close. It rose 0.5 percent on the week. "We remember a heavy sell-off last September after a solid floor of a 340-350 yen band was broken through, and I think that band is now providing a strong resistance," said Naoki Asami, chief broker at trading house Kanetsu.
"A correction could lead to a drop to 325 yen before bargain-hunting emerges," he said, adding that investors have a strong appetite to buy at low levels given a recovery in auto sales in Japan and the United States after supply disruptions in the wake of the March 11 earthquake in Japan and Thai floods.
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