Tokyo gold futures fell on Wednesday but recouped some losses as the yen-based contracts tracked moves of the dollar-based spot price in a market lacking fresh incentives. The benchmark most-distant June gold contract on the Tokyo Commodity Exchange finished down 5 yen per gram at 2,348 yen, after moving between 2,332 and 2,353 yen.
Other months fell by 3 to 13 yen. The key TOCOM gold contract has been trapped in a tight band between 2,300 and 2,400 yen since Friday. "I believe it will have to consolidate at the 2,300 yen level before moving up," a Tokyo analyst said. Many traders remain bullish about TOCOM gold, which hit a 20-year high of 2,587 yen on May 11.
It continues to trade at a level nearly 20 percent above the year's low of 1,967 yen marked on January 6. Total gold turnover on TOCOM was estimated at a moderate 90,358 lots, down from Tuesday's 108,371 lots. Gold is expected to look to currency markets and the conflict in the Middle East for direction. Spot gold was fetching $617.00/$617.75 an ounce at TOCOM's closing bell, compared with $617.60/$619.10 last quoted in New York. It earlier fell to $613.80/$615.30.
Gold futures in New York rebounded to end higher on Tuesday after a drop toward $600 an ounce a day earlier sparked short-covering and renewed buying.
August delivery gold at the COMEX division of the New York Mercantile Exchange climbed $4.80 to finish at $618 an ounce. In the currency market, the dollar was fetching 117.05/117.08 yen at 0630 GMT, against 117.16/117.21 yen in late New York trade. The US currency drew support from the results of the latest US consumer confidence and home sales data, which slightly boosted expectations the Federal Reserve will raise interest rates at its next policy meeting on August 8.
Traders said hostilities in the Middle East have the potential to boost gold, traditionally a safe-haven investment. Hizbollah vowed on Wednesday not to accept any "humiliating" conditions for a truce, as Israel's killing of four UN observers put pressure on an international conference in Rome to end the 15-day conflict.
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