Tokyo gold jumps nearly 2 percent to near one-week high

Tokyo gold futures jumped nearly 2 percent to their highest in nearly a week on Monday as a recovery in dollar-based prices prompted active bargain-hunting by investors and trading houses based on the metal's strong fundamentals.
Relatively strong buying emerged in holiday-thinned Tokyo trade amid growing views that heavy downward corrections seen in the last two weeks could be over. The benchmark December 2006 gold contract on the Tokyo Commodity Exchange closed at a session high of 1,913 yen its highest since December 20.
It was up 35 yen or 1.86 percent from Thursday's settlement. Other contracts closed up 15 to 33 yen. Tokyo markets were closed on Friday for a public holiday. "The market was starting to be convinced that investors have completed squaring positions following recent major selloffs," said Takashi Ogura, a manager at Kanetsu Asset Management.
"In the past, sentiment has usually turned extremely bearish after such major losses, but surprisingly we are seeing solid bargain-hunting and fresh buying around lows, which could mean the underlying trend is strong."
The benchmark contract tumbled to 1,830 yen on December 16 after peaking at an 18-year high of 2,155 yen on December 12, in a reflection of the yen's strength and after TOCOM raised margin requirements to curb volatility.
TOCOM gold stayed under downward pressure last week, although the fact that a fall in the key contract was limited at 1,846 yen on Wednesday also brightened sentiment.
Firmness in spot bullion also encouraged buying in TOCOM precious metals, traders said.
Gold was trading at $504.50/506.50 per ounce, up from $502.50/503.40 in New York. Gold was trading around $495 shortly after TOCOM finished trading on Thursday. "Sentiment improved as the spot price was above $500 again," said Shoji Seagate, assistant manager at Mitsubishi Corp.
Futures Ltd "It looks like there are many investors in Tokyo willing to buy gold on dips," he said. Other TOCOM precious metals jumped, tracing gold prices. The key TOCOM platinum December futures contract closed at 3,590 yen per gram, up 16 yen or 0.45 percent from Thursday's close. It had moved in a range of 3,569 to 3,599 yen.
Other contracts closed up by 11 to 29 yen.