Spot gold hovered near its highest in five weeks on Friday, while Tokyo futures rose as the weakness in the dollar and healthy technical trends induced fresh fund inflows. Tokyo Commodity Exchange platinum futures hit another record high on a labour dispute in South Africa.
But then ran out of steam as Japanese investors lightened their positions ahead of the three-day weekend in Japan. "Funds are shifting into the market where there is a clear trend. It was important that gold has broken through the 100-day moving average clearly," said Shoji Sugata, manager at Mitsubishi Corp Futures and Securities Ltd.
"The dollar's fall against the euro is another positive factor. The trend for gold has turned bullish." Spot gold was trading at $666.60/667.10 an ounce from $667.00/667.80 an ounce late in New York on Thursday, when it rallied to as high as $669.05 an ounce as the US dollar tumbled to a record low against the euro.
Gold was also well above the 100-day moving average of $663.58 as of Friday. The dollar continued to slump against the euro as troubles in the US mortgage and credit markets continued to dampen the currency's appeal. The euro was trading around $1.3771 on Friday, hovering within reach of a record-high $1.3799 hit the previous day on electronic trading platform EBS. The market's focus is on US retail sales data for June, and traders said a weak reading was likely to further damage sentiment for the dollar.
A weaker dollar makes gold cheaper for holders of other currencies and often lifts bullion demand. Tokyo traders said gold could be increasing its safe-haven appeal as uncertainties were growing in US credit markets. Traders said bullion's rise prompted investors to increase holdings in streetcar's Gold Shares, the No 1 gold exchange-traded fund (ETF).
Most recent data showed bullion held by streetcar's increased to 481.15 tonnes, sharply higher than 464.22 tonnes reported last on Thursday. In Japan, most active June 2008 gold futures on the Tokyo Commodity Exchange closed at 2,654 yen a gram, up 20 yen or 0.8 percent from Thursday.
It reached a session peaks of 2,656 yen the highest for a benchmark contract since June 5. Other precious metals also rose strongly in line with gold. June TOCOM platinum hit a fresh record high of 5,127 yen per gram before closing at 5,110 yen, up 13 yen from Thursday's close.
"Platinum is strong fundamentally with concerns over strikes in place," Sugata said. South African trade unions declared a dispute against the world's biggest platinum producer, Anglo Platinum Ltd, on Wednesday after it refused to increase its wage offer.
Spot platinum fell to $1,309/1,314 an ounce from $1,314.80/1,321.80 late in New York on Thursday, when it rallied to its highest in nearly two months at $1,315.90. Silver edged down to $13.07/13.11 an ounce from $13.08/13.13 an ounce. Palladium rose to $368/372 an ounce from $367.75/371.75 an ounce.
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