Tokyo gold and silver futures inched down in slow trade on Tuesday as firmness in the yen curbed the appetites of local individual investors. Gold prices fell from their highest level in almost four months marked late last week, and silver prices came off a 21-year high hit the previous day.
"There are few fresh incentives now, resulting in this mood of a market correction," said Satoshi Mustang, analyst at Mitsui Bussan Futures Ltd. Investors are mainly taking a clue from the currency market, he added. "Retail investors could step up their selling if the dollar/yen tests the 115 level again," he said.
A stronger yen against the dollar makes yen-denominated commodities cheaper in the dollar-billed export market, which normally leads to lower TOCOM prices. The key October gold contract on the Tokyo Commodity Exchange finished the session down 8 yen per gram or 0.3 percent at 2,425 yen.
It moved in a range of 2,423 to 2,427 yen. Other contracts were 4 to 11 yen lower. The dollar stayed near a four-month low of 114.97 yen marked at the end of last week. It traded at around 115.35 yen in Tokyo trade on Tuesday, compared with 115.31 yen in late New York on Monday. But a weaker dollar could be positive for dollar-based gold prices as it makes gold more attractive for investment funds as a currency alternative.
Spot gold traded at $646.40/647.40 an ounce, compared with $645.40/646.40 in New York late on Monday. Key TOCOM silver for October delivery finished the session down 1.3 yen per 10 grams or 0.3 percent at 520.2 yen. The October contract rose as high as 521.5 yen on Monday, the highest for a benchmark contract since September 12, 1985.
Cash silver rose as high as $14.09 an ounce on Tuesday, its highest since mid-May. The metal was last quoted at $14.08/14.15 an ounce on Monday. Traders said buying by investment funds through silver exchange-traded funds has supported silver.
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