Tokyo gold futures dropped to a two-week low on Thursday as a stronger yen and weak technical trends induced selling by investors ahead of next week's Japanese fiscal-year book closings.
Gold futures on the Tokyo Commodity Exchange were weighed down as the dollar-denominated spot price was capped above $550 per ounce in Asian trade.
"The market is range-bound as gold lacks clear factors and lacks direction now," said Tatsuo Kageyama, analyst at Kanetsu Asset Management.
"In this kind of situation, investors are losing interest to take positions in gold, which is causing volume to drop."
Key most-distant February TOCOM gold closed at 2,095 yen per gram, down 17 yen or 0.8 percent from Wednesday.
February gold dropped as low as 2,089 yen, the lowest since March 9. Its session high was 2,104 yen.
The key gold contract was weighed by technical selling, blocked by a series of short- and medium-term moving averages.
The contract was below its 7-day moving average (MA) of 2,103 yen, the 30-day MA of 2,115 yen and 50-day MA of 2,123 yen.
Kageyama said active long liquidation could emerge should key TOCOM gold dip below 2,047 yen, the low reached on February 14.
Still, gold could rally as short-covering could intensify if it breaks above 2,171 yen, a high hit on March 3, he said. "The mood in the gold market is not good due to the yen's strength and limited gains in oil prices," said a senior trader at a Japanese trading house.
"Short-term players could be taking fresh sell positions. This kind of trend will stay until the end of the first-quarter, with players from the Middle East also selling."
As of 0709 GMT, spot gold was quoted at $549.50/550.25 an ounce, versus $550.20/551.10 late in New York. Gold rose to a quarter-century peak of $574 in early February as investors diversified into precious metals amid tension in the Middle East, worries about rising energy costs and uncertainty about the dollar's outlook.
TOCOM platinum futures edged down, tracking falls in gold and reflecting the yen's strength.
It also reviewed supply-and-demand conditions of the seven metals and made assessments of 10 other metals. Among the 10 metals, the report said platinum, rare earth and indium could be considered for inclusion in the reserves in view of their importance to the information technology sector.
The trader at the trading house said TOCOM platinum showed little reaction to Kyodo's report as many players believed that it would take a while before the Japanese government could actually decide on its policy on metals reserves.
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