Tokyo gold futures jumped more than 3 percent on Wednesday as a rebound in the dollar-based spot price and a weaker yen prompted active short-covering following sharp falls in the last two sessions.
Platinum futures on the Tokyo Commodity Exchange rose by the daily 100 yen limit as sentiment continued strong after a bullish outlook report by the world's top platinum distributor Johnson Matthey last week.
Key most-distant April TOCOM gold rallied after falling 5 percent in the last two days from Friday's close of 2,494 yen a gram. "We're seeing active short-covering but the market is very volatile," said Akira Doi, a director at Daiichi Commodities.
"The long-term trend is bullish. That hasn't changed but the market will be nervous about chasing too actively on rises, particularly after recent volatility." Benchmark TOCOM gold futures closed at 2,448 yen, up 78 yen or 3.3 percent from Tuesday's close of 2,370 yen.
It moved in a range of 2,421 to 2,453 yen. On Tuesday, it hit a three-week low of 2,367 yen. Many short holders, who have built up positions in the last few days, were forced to cover them following a rapid rebound of gold and other precious metals, partly due to the yen's fall.
On charts, key April TOCOM gold is likely to face resistance around the 7-day moving average of 2,462 yen and the 14-day MA of 2,493 yen, with firm support seen around 2,300 yen. The yen fell as low as around 112.60 against the dollar on Wednesday after rising to around 111 the previous day.
A lower yen effectively lifts the value of yen-based gold.
In New York on Tuesday spot gold rose more than 2 percent, reflecting firmness in crude oil prices.
Oil prices are expected to be solid as the US government forecast an active hurricane season that could threaten rigs and refineries again this year.
Strong crude oil prices provide support for gold, which edge against inflation. Spot gold was trading at $668.40/$669.20 an ounce after dipping as low as $662.90 in Asian hours. It was at $672.10/672.90 late in the US market.
Gold fell to $636.20 an ounce on Monday, it's lowest since April 28 and down almost 13 percent from a 26-year high of $730 reached on May 12. "We have to see whether gold can rise beyond the previous high relatively quickly let's say in the next month," said an analyst at a Japanese commodity brokerage.
"If not the market could enter a major corrective phase to drive down spot gold sharply."
Other precious metals also jumped, tracking gains in gold. All six TOCOM silver contract rose by the 18 yen daily limit and TOCOM platinum surged by the daily 100 yen limit, taking the key April contract to 4,547 yen.
Comments
Comments are closed.