Gold jumps in Tokyo

Gold fell on Monday but it was supported by safe-haven demand amid uncertainty in financial markets with the underlying problem of the US supreme mortgages still unresolved. Falls in equities and credit markets could make investors nervous in buying gold and other commodities, but investment funds and end-users were looking to buy the metal on dips after seeing it bounce back from lows on Friday, traders said.
Japanese gold futures rallied more than 1 percent on active short covering, while cash gold fell slightly, but it was supported by plenty of bargain-hunting. "The gold market is still very nervous. Many people are willing to take a wait-and-see stance because of unstable stocks, currencies and credit markets," said Tatsuo Kageyama, an analyst at Kanetsu Asset Management in Tokyo.
"Uncertainty in financial markets is very worrying, but so far we haven't seen a major outflow of funds from gold. It's possible that investors are treating gold as a last resort of investment," Kageyama said. Spot gold was trading at 670.40/671.20 dollars an ounce, down from 672.30/672.90 dollars late in New York.
It hit an intrude low of 658.10 dollars an ounce on Friday before rebounding on safe-haven buying and as the Federal Reserve pumped money into the banking system to ward off a global credit crisis.
The benchmark June 2008 gold futures contract on the Tokyo Commodity Exchange finished the session up 27 yen or 1.1 percent at 2,575 yen per gram from Friday's close. It moved in a range of 2,571 to 2,578 yen. The TOCOM gold contract faced technical resistance's at the seven-day moving average of 2,582 yen and the 14-day average of 2,583 yen.
On Friday, cash gold bounced more than 2 percent after the Federal Reserve injected funds into the banking system to provide liquidity in the financial markets. More turbulence in financial markets could affect precious metals prices, but metals traders were not overly pessimistic about the market's outlook.
"Investors have already lightened their positions in gold over the past week as uncertainty was spreading, so now gold is gaining support after seeing safe-haven demand," said Shoji Sugata, manager Mitsubishi Corp Futures and Securities. "But as long as uncertainty remains, the market will be careful about taking large positions in gold," Sugata said.
Sugata said TOCOM gold will find support around 2,500 yen, but Japanese investors will continue to see trend of the yen to set a direction. The yen rose against the dollar on Monday as a squeeze in money markets from the spreading US supreme mortgage distress prompted investors to trim risky positions such as carry trades.
The dollar eased to 118.30 yen from near 118.40 yen in late US trade on Friday, holding off the four-month low of 117.19 yen hit on electronic trading platform EBS last week.
Platinum was little change at 1,271/1,276 dollars an ounce, compared with 1,272/1,276 dollars late in New York on Friday, when it fell to a six-week low of 1,260 dollars an ounce. Tokyo traders said speculators remained keen about cutting positions in platinum after South Africa's National Union of Mineworkers reached a wage settlement with the world's biggest platinum miner Anglo Platinum last week.
"Platinum will stay under profit-taking pressure as there are very few reasons to buy after the settlement of a labour dispute. Speculative buying in platinum will be limited for a while in this mood," Kanetsu's Kageyama said. Silver fell to 12.77/12.82 dollars an ounce from 12.82/12.80 dollars late in New York.
It had tumbled to a five-week low of 12.57 dollars an ounce on Friday to track losses in gold. Palladium fell to 350/355 dollars an ounce from 351/355 dollars an ounce in New York on Friday, when it fell to 346 dollars an ounce its lowest since mid-March.