Gold rebounded on Tuesday as buying interest from investors resurfaced at lower levels, but dealers said the market lacked impetus to break free from the current range.
Spot gold hit a low of $621 an ounce due to profit taking from last week's one-month high of $637 an ounce and declines in Tokyo gold futures. Gold was quoted at $627.90/629.40 an ounce, higher than $624.00/625.50 late in New York on Monday, when it fell nearly $6 an ounce.
"There's buying on dips, I think. But gold is still very much in the trading range of $622 to $632," said a dealer in Singapore. The benchmark June 2007 gold contract on the Tokyo Commodity Exchange rose 16 yen per gram to 2,337 yen ($20.47), having fallen to a one-week low of 2,310 yen on declines in New York's Comex market.
"TOCOM tried to move lower this but there seemed to be good support around 2,300 yen. In the spot market, the range is still at $620 to $635. There are no factors to move the market," said a dealer in Hong Kong.
But some dealers said the currency market could offer direction for gold as a weaker dollar makes dollar-denominated gold more attractive to buy. The dollar eased to 113.95 yen from near 114.30 yen late in New York trade, but the US currency was still up from the one-month low of 113.45 yen struck on electronic trading platform EBS on Monday.
The euro was a little higher at $1.2740. The yen was buoyed by expectations the Bank of Japan will raise interest rates this week for the first time in six years. The BOJ is widely seen raising rates to 0.25 percent from virtually zero, but many market players are unsure whether the yen will benefit much because rates in Japan are likely to remain well below those in the United States and the euro zone.
"However, a solid stimulus is still lacking in the precious metals market," said N M Rothschild in a daily report. "Even with North Korean geopolitical concerns 'hooting up' in relation to missile testing and concerns about Iran's nuclear plans, the absence of aggressive geopolitical news in regard to these issues has limited their impact on the gold price," it said.
In other precious metals, platinum rose to $1,230/1,235 an ounce from $1,219/1,225 in New York. Sister metal palladium also rose to $317.50/322.50 an ounce from $314/320. Silver edged up to $11.09/11.16 an ounce from $11.05/11.15 late in New York on Monday, when it fell to its lowest since June 30 at $10.87 an ounce.
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