Tokyo gold futures edged up to a fresh one-and-a-half-week high on Wednesday as the dollar struggled in the wake of weaker-than-expected US economic data and wariness over the outlook for the currency.
Gold was regaining its allure as investors adjusted positions ahead of the week's final round of US economic indicators and the Federal Reserve's policy-setting meeting on September 21, traders said.
"The market is closely looking at the dollar now to determine a direction for gold," said Tadashi Hashimoto, general manager at Nissho Iwai Futures. "Gold has been drawing steady interest as the market is not confident about the outlook for the dollar and in this mood gold and other precious metals are attractive."
The key August gold contract on the Tokyo Commodity Exchange (TOCOM) closed up 3 yen per gram at its session high of 1,431 yen, the second straight day it has finished at its session high.
Other contracts closed down 1 yen to up 4 yen. Fund operators outside Japan were detected to have actively bought TOCOM gold, along with spot gold, in the previous session, but their purchases were limited on Wednesday, traders said.
Spot gold was at $404.90/5.65 an ounce against $404.95/5.70 in late New York trade on Tuesday. The market's focus turned to the Federal Reserve Bank of New York's regional survey of factory activity later in the day, which is expected to show a jump to 18.8 in September from 12.6 in August.
The dollar came under pressure on Tuesday after data showed the US current account deficit ballooned to a record in the second quarter.
Other figures showed retail sales fell 0.3 percent in August, compared with forecasts for a 0.1 percent decline.
The dollar backed off slightly to 109.41/46 yen from the late New York level of 109.64/67.
The currency has been struggling to keep above 110 yen since late last week. Platinum fell back after posting strong gains the previous day, but the key TOCOM platinum contract was supported around 2,800 yen per gram, traders said.
"Platinum has fallen quite a bit from above 3,000 yen, which was seen about a month ago," Nissho's Hashimoto said. "But the market appears to be convinced that it won't fall much further after seeing strong buying by end-users in the spot market after last week's falls."
The key platinum contract hit a high of 3,011 yen per gram about a month ago, but it dropped to a six-week low of 2,790 yen on Friday. Key August TOCOM platinum closed down 8 yen per gram at 2,850 yen.
It had moved in a range of 2,837 to 2,866 yen.
Other contracts closed 7 to 16 yen lower. Spot platinum fell to $840/845 an ounce against $843/848 in New York.
Below are closing prices for TOCOM's most active precious metals contracts, with the day's turnover for each metal.