Gold rose on Tuesday after a rebound in Tokyo futures sparked speculative buying, but the metal seemed stuck in a familiar range despite some support from firm oil.
Spot gold hit an intraday high of $650.40 an ounce and was at $650.20/650.90 an ounce by 0715 GMT, higher than $649.00/649.70 late in New York on Monday, when it had risen around $2 on renewed buying interest from funds.
"Unless we clearly break the recent high of $660 and close above that, it just continues to be a wide range trading trend between $640 and $650," said Peter Tse, a dealer at Scotia Mocatta in Hong Kong.
"It will just follow oil," said Tse, adding that physical buyers were also waiting for a price dip before buying again. Crude oil hovered around $59 a barrel as the coldest weather of the US winter was expected to draw down distillate stocks.
Oil rallied to a one-month peak of $59.95 on Monday after rising 6.5 percent the previous week on the onset of a chilly spell in the US Northeast, ending months of unusually warm conditions that had curbed heating fuel demand.
"It's purely speculative buying after people see a rebound in TOCOM. The price has dropped nearly $4, so that's why you see the buying as well," said a dealer in Hong Kong, referring to gold's intraday low around $645.
Benchmark gold futures on the Tokyo Commodity Exchange, currently December 2007, dropped to as low as 2,522 yen per gram, its lowest since January 25, before ending at 2,539 yen on bargain hunting, up 7 yen from Monday's close.
But a firm yen dampened sentiment in Japan, where many investors were on the sidelines ahead of the February 9-10 meeting of the Group of Seven industrialised nations.
Purchases from Japanese investors helped gold reach multi-year highs last year. Gold scored a 26-year high of $730 an ounce in mid-May. "People hesitate to invest in yen, dollar and also commodities. The market is not so active nowadays," said Yukuji Sonoda, precious metals analyst at Daiichi Commodities in Tokyo.
But fund managers who were anxious about the yen's strength could also shift some of their money into bullion for hedging purposes, which could offer support at $630 for cash gold, he said.
"In this case, dollar-priced gold will increase," said Sonoda. The yen extended gains on short covering on Tuesday, driven by concerns the Japanese currency's weakness may be scrutinised at the weekend G7 meeting.
European officials have complained the yen's weakness gives Japanese exporters an unfair competitive edge over euro zone products. The dollar edged down to 120.23 yen, while the euro was steady at $1.2933.
Silver edged up to $13.48/13.53 an ounce from $13.47/13.52 late in New York. Platinum rose to $1,172/1,177 an ounce from $1,165/1,170 an ounce. Palladium was at $337/342, versus $337/341 an ounce.
Comments
Comments are closed.