Gold bounced on Wednesday on bargain hunting, while Tokyo futures fell after rising to its best level in a week. Spot gold rose to $653.90/654.70 an ounce from $652.70/653.50 late in New York on Tuesday, when it dropped $4 as investors locked in profits after on Monday's rally to its best level in nearly two weeks.
Key June 2008 gold futures on the Tokyo Commodity Exchange fell 19 yen per gram to 2,606 yen as New York's Comex market dipped on profit taking and position squaring ahead of the US Independent Day holiday.
The Tokyo contract had risen to as high as 2,625 yen on Tuesday. The euro dipped to $1.3607. Platinum rose to $1,281/1,286 an ounce from $1,280/1,284 an ounce late in New York. Silver edged up to $12.58/12.61 an ounce from $12.56/12.61 late in New York. Palladium was steady at $364/369 an ounce.
TOKYO: Gold bounced on Wednesday on bargain hunting, while Tokyo futures fell close to one percent on the heels of New York's decline. Security worries triggered by the suspected al Qaeda plot to detonate car bombs in London and Glasgow, meant that gold had the potential to gain further on safe-haven buying, but some traders said gold lacked the power to break past resistance at $660-$665.
Spot gold stood at $653.75/654.25 an ounce, versus $652.70/$653.50 in late New York. Akira Doi, managing director at Daiichi Commodities Co Ltd, said gold's upward momentum seemed weak, although the market did not lack for bullish factors.
"You have the plots, the dollar is relatively weak, while oil is strong. You have all these incentives that would merit a rise, and yet gold's not moving much," Doi said.
Gold typically gains strength from high oil prices as some investors look to the metal as an inflation hedge, while dollar-based gold prices tend to rise when the US currency falls, because it gains value in overseas markets.
Doi noted that resistance remained strong at $660-$665, around the 100-day moving average. Profit taking and position squaring dominated much of the activity on Tuesday's New York market ahead of the US Independence Day holiday on Wednesday. Most-active gold for August delivery on the Comex division of the New York Mercantile Exchange settled down $3.80 at $655.40 an ounce on Tuesday.
On the Tokyo Commodity Exchange, the most active gold futures contract for June 2008 delivery finished the morning at 2,603 yen a gram, down 22 yen or 0.8 percent from Tuesday's close, after moving between 2,602 yen and 2,609 yen.
The slightly firmer yen also lent support to TOCOM gold. The dollar held near a 26-year low against the pound on Wednesday and a two-month trough versus the euro, with trade quiet around the US holiday ahead of key central bank verdicts later in the week.
The dollar was trading at around 122.33 yen from near 122.40 in late US trade. This compare with 124.14 yen, the 4-1/2 year high marked in late June. US crude oil inched down from Tuesday's settlement of $71.41 a barrel, when it rose 32 cents, but continued to trade well above $71, due to strong summer driving demand in top consumer the United States. Cash platinum traded mostly unchanged at $1,280/$1,285 an ounce. Spot silver was at $12.57/$12.62 an ounce from $12.56/12.61 in New York.
Spot palladium was mostly flat at $364/369 an ounce.