Tokyo gold futures finished a touch higher on Wednesday supported by a firm bullion market and a soft yen, but trade remained rangebound as players pondered the market's direction.
The benchmark most distant February gold futures contract on the Tokyo Commodity Exchange finished at 2,112 yen per gram, up five yen from Monday when it closed at 2,107 yen. It moved within a narrow band of 2,105-2,116 yen.
Financial markets were closed in Japan on Tuesday due to a national holiday. Other TOCOM gold contracts finished up five to eight yen on Wednesday, with the exception of the prompt April contract, which closed flat at 2,076 yen.
TOCOM gold has hovered below 2,120 yen for almost two weeks, reflecting rangebound trade in other markets such as currency and crude oil, a Tokyo analyst said. "I think it will be difficult for gold to move dramatically in any direction until the currency market or the crude oil market manages to break out of its current rangebound trade," the analyst said.
Some market participants said gold price moves might depend on developments in the currency market after an upbeat view of the economy from Fed Chairman Ben Bernanke on Tuesday helped revive expectations for the central bank to continue raising rates.
"In the dollar-denominated market, there is some uncertainty about the flow of money if interest rates are hiked," said Koji Suzuki, a market analyst at Livedoor Commodity. The dollar was fetching 117.20/117.23 yen, little changed from 117.27/117.30 yen in late New York trade.
The US currency was a touch firmer against the yen compared with Monday, when it was trading around 116.24/116.29 yen. Bullion was firmer but speculation about US interest rate hikes kept it in a tight range.
Spot gold was fetching $552.70/$553.20 an ounce at TOCOM's closing bell, compared with $551.80/$552.70 last quoted in New York on Tuesday. Total gold turnover on TOCOM was estimated at modest 37,237 lots, but up from Monday's 31,944 lots.
Gold on the Comex division of the New York Mercantile Exchange finished lower on Tuesday, pressured by a firmer dollar. All other TOCOM precious metals rose on Wednesday, lifted by the softer yen.
TOCOM silver also drew strength from news that US regulators have given the go-ahead for a proposed exchange-traded fund in the precious metal.
Spot silver rose to its highest level in more than 22 years as fund managers bought silver after the Securities and Exchange Commission said it had approved rule changes to allow the American Stock Exchange to list shares in Barclays PLC's iShares Silver Trust.
February TOCOM silver closed at 387.7 yen per 10 grams, up 6.8 yen. Spot silver rose to $10.57 per ounce, its highest level since October 1983. The metal was trading around $10.53/$10.56 late in New York on Tuesday.
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