Tokyo gold futures dropped on Thursday, catching up with falls in cash gold, after investment funds the previous day liquidated positions in commodities, including precious metals. Cash gold held near New York levels on Thursday after a decision by the Federal Reserve to hold interest rates steady, but it came under profit-taking pressure after it failed to break through a psychological level of $700 an ounce.
"A slight recovery in the dollar put some pressure on gold, but the long-term trend for the dollar remains bearish," said Tatsuo Kageyama, an analyst at Kanetsu Asset Management in Tokyo. Kageyama said investors were keen to take profits after the cash price failed to rise above $700 and the key Tokyo Commodity Exchange gold futures failed to rise beyond 2,700 yen a gram.
Spot gold was trading at $679.10/680.60 an ounce, little changed from $679.50/680.00 late in New York on Wednesday, when it dropped to its lowest in nearly a week at $675.50 on fund selling. The dollar was supported against the yen on Thursday, after the Fed held benchmark US interest rates steady and said its main worry was that inflation would fail to moderate. In a widely expected decision, the Fed kept the federal funds rate unchanged at 5.25 percent on Wednesday and said in a statement that core inflation remained somewhat elevated.
The key TOCOM gold contract for April 2008 delivery closed at the session low and the 14-day moving average of 2,646 yen. It was down 24 yen or 0.9 percent from the previous close.
But TOCOM gold could fall to 2,631 yen hit on May 2, to fill in a chart gap, when it drops below the moving average. Platinum was under pressure along with gold, but traders were reluctant to sell actively given the metal's bullish fundamentals after launches of exchange-traded funds (ETFs). London-based ETF Securities said it was launching its five bullion funds based on physical metals, already listed in London, on the Deutsche Bourse on Wednesday.
The London platinum ETF has so far accumulated about 8,370 ounces of metal since its launch last month. Switzerland's Zurich Continual Bank is scheduled to launch ETFs in platinum, palladium and silver later on Thursday.
Platinum edged down to $1,323/1,327 an ounce from $1,324/1,329 late in New York. Japanese platinum futures fell but they were still near record highs reached in the week. Key April 2008 TOCOM platinum closed at 5,004 yen a gram, down 6 yen or 0.1 percent from Wednesday. It had moved in a range of 4,984 to 5,010 yen.
On Tuesday, it reached a record high of 5,017 yen. Palladium fell to $365/369 an ounce from $368/372 in New York on Wednesday. Silver fell to $13.30/13.35 an ounce from $13.35/13.38 in late New York.
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