Tokyo Commodity Exchange gold and platinum futures surged on Friday as the yen's fall beyond 120 yen to the dollar and bullish dollar-based spot prices sparked active buying by funds and retail investors.
All five TOCOM gold futures contracts rose by the daily 50-yen limit at one point, with the key October contract reaching a new 15-year high of 1,974 yen per gram.
Benchmark TOCOM platinum futures also rose by the daily 90 yen limit to a record high of 3,900 yen, mainly tracing gains in gold. Precious metals came under slight profit-taking pressure after hitting the highs, but the underlying trend stayed bullish.
"We've seen downward corrections this week, but we've also confirmed that prices are very solid," said Shoji Sugata, assistant manager Mitsubishi Corp Futures Ltd.
"Gold is unlikely to face major liquidation that would alter the current bullish sentiment." The October gold contract was trading at 1,969 yen, up 45 yen or 2.34 percent from Thursday's close.
Four other TOCOM gold futures contracts between February and August climbed by the 50 yen limit at one point in the, but were off their highs.
The prompt December contract, which is not subject to a daily limit, also rose 50 yen. Firmness of the dollar-based price supported Tokyo prices.
Spot gold was trading at $503.20/503.70 per ounce, up from $503.00/503.75 in New York. It briefly climbed to a high of $505 in Asia, it's highest since February 1983.
The yen's fall beyond the psychologically important level of 120 yen against the dollar provided additional support to TOCOM prices as a weaker Japanese currency usually has the effect of raising the value of yen-based commodity prices.
The yen fell as low as 120.73 yen on Thursday, it's lowest against the US currency since April 2003. "The yen's drop below 120 is giving big psychological support to TOCOM prices," Sugata said.
"The market is now focusing on lifting the distant TOCOM gold price to 2,000 yen and platinum towards 3,950 yen and 4,000 yen." The benchmark October platinum futures contract was trading at 3,880 yen, up 70 yen or 1.84 percent from Thursday's settlement of 3,810 yen.
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