Tokyo gold slips amid cautious trading

Tokyo gold futures inched down another notch on Thursday after moving within a narrow band in cautious trade ahead of a Federal Reserve's decision on interest rates that is likely to dictate market direction.
The key gold contract on the Tokyo Commodity Exchange has wavered narrowly straddling 2,200 yen since late last week as more traders chose to wait for the Fed.'s decision on Thursday. The benchmark most-distant June gold contract on TOCOM finished down five yen per gram at 2,203 yen, a session trough.
The day's peak was 2,216 yen. Other months fell by one to four yen. "A further gold rise could be capped for the time being if there's any suggestion from the Fed that there may be more interest rate hikes in store," one Tokyo broker said.
Other traders have suggested that the market could be relatively quiet for a while as the New York futures market will close for the Independence Day holiday. It will close on Friday and will remain shut on Monday and Tuesday.
The TOCOM gold market has bounced back since hitting a 14-week low of 2,079 yen reported on June 15, climbing by as much as 7 percent but lacking the energy to rise higher. The Fed meeting is expected to conclude with a decision to lift overnight rates to 5.25 percent from the current 5 percent, as well as provide a clue on whether to expect further tightening in August.
Higher rates support the dollar and may diminish gold's attraction as an alternative investment.
Spot gold was fetching $580.15/$581.15 an ounce at TOCOM's closing bell, compared with $579.60/$580.30 last quoted in New York. Gold futures finished lower in New York on Wednesday in choppy trade ahead of the Fed.'s decision.
August-delivery gold at the Comex division of the New York Mercantile Exchange fell $3.40 to conclude at $581 an ounce. A reluctance to fortify positions ahead of the Fed meeting and book squaring before the close on Friday dominated market activity. Total gold turnover on TOCOM was estimated at light 47,982 lots, down from Wednesday's 74,642 lots.
The dollar was fetching 116.53/116.56 yen, against 116.38/116.41 yen in late New York trade. It hit a two-month high of 116.71 yen on trading platform EBS in the week.