Tokyo gold futures drifted down from fresh five-week highs on Thursday as traders lightened positions following recent steep rises in prices ahead of US employment data due the next day.
Concerns over North Korea's missile launches had spurred buying by Japanese investors, but gold then eased on the view that this will not lead to widespread tension in the region that would trigger repeated safe-haven buying of the yellow metal.
Tokyo Commodity Exchange gold futures also came under pressure in late afternoon trade as the market concentrated on position adjustments ahead of US job data.
Markets are hoping to see strong figures after on Wednesday's private-sector US employment report showed solid job growth last month, which could support the dollar, thus putting pressure on gold.
A rising dollar tends to promote selling in dollar-based gold by investors holding foreign cash.
"We cannot totally disregard North Korea, but at the same time, this factor alone shouldn't draw constant buying without a new development," said a senior trader at a Japanese trade house.
"Some traders also were concerned about buying gold heavily due to concerns that they may see another selloff, like those seen last month." The benchmark most-distant June TOCOM gold contract closed at a session low of 2,342 yen a gram, down 1 yen from Wednesday. Other contracts closed down by one to four yen, except for the spot August futures, which closed up nine yen.
In the morning, key June TOCOM gold rose as far as 2,370 yen a gram the highest for a benchmark contract since June 1 on buying led by retail investors based on concerns over North Korea and bullish technical trends.
"More than foreign investors, Japanese retail players are anxious about taking positions in gold on the North Korea factor," said Shoji Sugata, assistant manager at Mitsubishi Corp futures and Securities Co Ltd.
NBC News reported on Wednesday, citing unnamed US officials, that North Korea appears to be making preparations to launch another long-range Taepodong-2 missile, though the missile is not yet on the launch pad.
On Wednesday, North Korea test-fired seven missiles. The technical picture for gold stayed bullish after the key contract broke through the 50-moving average (MA) the previous day.
The June TOCOM contract held above the 50-day MA on Thursday, which is around 2,342 yen. But the market was slightly concerned about taking large new buy positions after seeing TOCOM gold surge nearly 8 percent in the last week.
Dollar-based spot gold was weighed down in late Asian trading after rising nearly $6 in New York the previous day. Gold was quoted at $624.80/625.50 an ounce, against $627.40/628.10 late in New York on Wednesday.
But gold gained support from bullish oil prices as the metal is often used as a hedge against inflation. US light crude oil futures prices rose for the 10th straight session on Wednesday, hitting a record intrude high of $75.40 a barrel before settling at a record $75.19.
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