Tokyo gold futures hit a three-week high on Monday, boosted by a strong dollar-based spot price, but they came off their highs as the yen's rebound forced investors to cut back positions.
The benchmark most distant February TOCOM gold contract rose as high as 2,142 yen per gram, the highest since March 7.
The contract broke through several technical resistance levels, but lacked the energy to go further and eventually closed at 2,129 yen, up 21 yen or 1 percent from Friday. Other contracts closed up 11 to 22 yen.
"The yen's large rallies depressed yen-based commodities as a whole, including gold," said Hiroyuki Kikukawa, associate director at Nihon Unicom Corp "Gold is still rangebound, lacking trading factors of its own.
Extremely bullish silver and base metals are lending support to gold," Kikukawa said. Tokyo Commodity Exchange platinum closed off its session high above 4,000 yen per gram after meeting heavy technical sales.
The yen gained nearly 1 percent against the dollar on Monday on buying by Japanese investors bringing overseas earnings home before the current business year wraps up this week.
The Japanese currency was trading at 116.65/67 against the dollar, strengthening sharply from an intrude high of 118.50 on Friday.
A higher yen has the effect of lowering the value of yen-based precious metals prices.
Despite giving up some of its gains, TOCOM gold closed above key short- and medium-term moving averages (MA), including the 7-day MA of 2,108 yen and the 50-day MA of 2,126 yen, but traders were still unconvinced about the outlook for the market.
Traders said there were few fundamental factors to convince fund operators to take large new buy positions.
"I'm sure more fund operators would shift into gold from the start of the second quarter, although they are expected to buy at a gradual pace first," Kikukawa said.
Firm oil prices supported gold, with benchmark US crude futures holding around $64 a barrel.
Bullish oil prices usually support gold as the metal is often seen as a hedge against inflation. Spot gold was up to $562.00/562.75 an ounce from $560.00/560.90 an ounce late in New York.
Gold shrugged off the first day of trading of Taiwan's first gold futures contract and comments from a Bank of China official that China should use part of its fast-growing foreign exchange reserves to buy gold.
The yellow metal received support from dollar-based silver, which rose to its highest level in more than 22 years on Monday. Silver has risen on expectations a silver-backed security will soon attract demand for investment in the metal, which is mainly used in jewellery, photography and electronics.
It has gained more than 22 percent in value this year. TOCOM platinum futures closed mixed, with nearby contracts edging down, while distant contract found support.
The key platinum contract broke through some moving averages, but faced difficulties sustaining 4,000 yen, as there was plenty of profit taking around that high.
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