Gold was fluctuating narrowly around the key $420 an ounce level in Asia on Wednesday, losing momentum as the dollar took a breather after hitting a three-month low against the yen and as oil prices steadied.
Spot gold was quoted at $419.50/420.25 an ounce, compared with Tuesday's New York close of $420.10/60. "The upside looks heavy as funds are ready to sell on rallies," a Tokyo broker said, adding that gold was unlikely to break $420 resistance decisively in the short term.
Bullion was bid as high as $420.30 ahead the Asian as gold became cheaper for non-US buyers due to a weaker dollar. A bullion trader in Tokyo said he expected gold to be locked in a tight band between $419 and $421 for the rest of the day in Asia, taking a cue from the currency market.
Demand from jewellery makers remained slow; suggesting prices would have to soften further to generate fresh physical buying. Asian dealers pegged key support for gold at $410 an ounce, a level that was likely to trigger fresh buying interest from investors and jewellery makers.
Gold yo-yoed in a wide range last week, when it peaked at $422.95 on Monday before dipping to $408.95 on Wednesday. It then partially recovered back above $421 during on Friday's session.
On the Tokyo Commodity Exchange (TOCOM), gold futures firmed on Wednesday, tracking gains in New York. But the yen's steep rise against the dollar made local investors wary of chasing the rally.
The August gold contract was up four yen per gram at 1,467 after trading between 1,466 and 1,469. Volume was thin as Japanese investors turned their interest to more volatile energy futures in Tokyo, brokers said.
In the currency market, the yen edged down against the dollar on Wednesday as Japanese stock prices slid, but it remained within striking distance of three-month highs on persistent concerns about the health of the US economy.
The dollar was fetching 108.60/64 yen, recovering slightly from a fall of around 0.8 percent in New York trade, where it hit 108.27, the lowest figure since July 20. The euro was trading at $1.2501/06, barely changed from its level in late US trade.
On Monday it marked a 7-1/2-month high against the dollar at $1.2535. US light crude was quoted around $53.26, off the record high of $55.33 set on Monday.
Spot platinum was quoted at $837.50/842.50 an ounce, compared with $835.50/840.50 in late New York.
Sister metal palladium was at $214.00/219.00 an ounce, versus $211.50/217.50 in the US market. Silver was at $7.12/7.14 an ounce, versus $7.16/7.19 in New York.