Spot gold bounced back on Thursday, recovering from a three-month low on bargain hunting, while Tokyo futures rose by 1 percent, helped by a slide in the value of the yen. Spot gold rose to $650.20/$651.70 an ounce from $647.20/$650.70 last quoted in New York.
Traders said, however, sentiment for gold was weak and nervous, noting it was trading at a level some 2 percent below the 100-day moving average of about $664. "Gold is walking a very thin tightrope," said Akira Doi, director at Daiichi Commodities Co Ltd.
Expectations interest rates will rise in several major economies, denting investment demand for gold, continued to weigh on the precious metal. Doi said bullion had the potential to fall as low as $630 if it breached $645, as that was likely to accelerate liquidation moves.
The benchmark most distant April gold contract on the Tokyo Commodity Exchange closed up 31 yen per gram, or about 1.2 percent, at 2,598 yen, just one yen off of the day's peak of 2,599 yen, which was a one-week high. This marked a recovery from Wednesday when it fell to a 10-week low of 2,556 yen, tracking weak spot prices.
Traders said Tokyo gold futures were drawing strength from the weak yen, which hit a 4-1/2-year low against the dollar on Thursday after strong United States retail sales data on Wednesday. The figures reinforced expectations that the Federal Reserve would not cut interest rates this year.
The dollar rose as high as 122.83 yen on electronic trading platform EBS, the highest level since December 2002. US gold futures ended modestly lower on Wednesday, as general concern about rising interest rates interrupted advance.
Most-active gold futures for August on the Comex division of the New York Mercantile Exchange settled down 40 cents at $652.70 an ounce. Benchmark April platinum futures finished up 35 yen at 5,005 yen per gram.
Spot platinum rose to $1,280/$1,285 from New York levels of $1,278/$1,283 an ounce. April TOCOM silver finished at 520.9 yen per 10 grams, up 7.8 yen. Spot silver was mostly unchanged at $13.08/$13.11 an ounce. April TOCOM palladium was at 1,465 yen per gram, up 3 yen. Spot palladium was up at $366/$371 an ounce, compared with $362/$367 in New York.