Gold inched up on Wednesday as Tokyo futures hit their highest in nearly seven weeks on a falling yen, after media reports that Prime Minister Shines Abe would resign sparked fears of political uncertainty.
Abe, struggling after a bashing at the polls and suffering low support rates, said in a later news conference he decided to resign on Wednesday, in the hope that a new leader would be better placed to deal with Japan's support for US-led operations in Afghanistan.
Spot gold stood at $712.90/713.70 an ounce, getting closer to a 16-month high marked the previous day, as yen-based buying emerged in the afternoon after a round of profit-taking.
A rise in oil prices above $78 a barrel also supported the market as gold is generally seen as a hedge against oil-led inflation. In New York, bullion rose as high as $714.20 on a weaker dollar and chart-based buying before easing to $711.90/712.50.
The benchmark August 2008 gold futures on the Tokyo Commodity Exchange (TOCOM) rose 42 yen per gram, or 1.6 percent, to 2,637 yen. The contract earlier rose as high as 2,645 yen, the highest for any benchmark since July 26. The contract hit an intrude low of 2,561 yen on Monday, when a firmer yen sparked selling from investors.
Similarly, key August platinum futures rose to a four-week high of 4,774 yen a gram in the afternoon before easing to 4,757 yen in late trade. US crude oil futures traded at $78.25 a barrel, holding near a record high of $78.77 marked last month, after Opec's token output increase failed to soothe consumers' worries about falling inventories.
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