Gold fell further on Wednesday as the dollar rose to an 11-week high against the euro, while Japanese futures dropped to track losses in New York's Comex market and weak spot prices. Spot gold fell to $646.70/647.30 an ounce from $648.30/649.80 late in New York on Tuesday, when it dropped more than $5 as expectations of higher US interest lifted the dollar.
Key April 2008 gold futures on the Tokyo Commodity Exchange fell 27 yen per gram to 2,558 yen. The euro fell to an 11-week low against the dollar on Wednesday, as the dollar was boosted by a surge in US bond yields to five-year highs.
The euro fell below $1.3300 for the first time since late March, dropping to $1.3292, Reuters's data showed. Silver dipped to $13.00/13.03 an ounce from $13.06/13.09 late in New York.
Platinum fell to $1,286/1,291 an ounce from $1,288/1,292 late in New York. Palladium dipped to $365/370 an ounce from $366/370 an ounce. Cash gold fell near to a three-month low on Wednesday hit by the gaining dollar and rising US bond yields, while Tokyo futures fell to a 10-week low, tracking weak spot prices.
Spot gold fell to $646.10/646.70 an ounce from $648.30/649.80 last quoted in New York. "The primary reason for the dollar's strength is higher interest rates and until higher interest rates remain a factor, gold is going to be under pressure," said Tatsuo Kageyama, analyst at Kanetsu Asset Management Co Ltd.
Gold bullion fell closer to a three-month trough of $644.00 marked last week, and some traders said sagging sentiment could send it to $640 or lower. The benchmark most-distant April gold contract on the Tokyo Commodity Exchange fell to 2,567 yen per gram, down 18 yen, or 0.7 percent.
It fell as low as 2,556 yen, the lowest level for any benchmark since April 3 when the contract hit 2,532 yen. Although TOCOM gold has been shielded to some extent by the soft yen against the dollar, it cannot remain totally immune to the dollar-driven downtrend, Kageyama said.
"Buying interest is very low key in Tokyo," he said. The dollar on Wednesday soared above 122 yen to a 4-1/2-year peak against the yen. The euro fell to an 11-week low below $1.3300. The benchmark US 10-year yield jumped to a five-year high of 5.31 percent in early trade on Wednesday, extending the previous day's rise on views that robust global growth could prompt central banks to raise interest rates.
TOCOM gold could draw some support at the 2,530-2,540 yen level, analysts said. Benchmark April platinum futures contract closed down 30 yen per gram at 4,970 yen. Spot platinum fell to $1,281/1,285 an ounce from New York levels of $1,288/$1,292.
April TOCOM silver fell 5.0 yen to 513.1 yen per 10 grams, having trimmed its losses, when it hit 509.5 yen, a three-week low. Spot silver dropped to $12.95/12.99 an ounce from $13.06/13.09 in New York. April TOCOM palladium was at 1,462 yen per gram, up 5 yen from the previous close. Spot palladium was largely steady at $365/370 an ounce.