Gold clung to New York levels in Asia on Friday after prices failed to test $430 an ounce, reflecting a slow down in jewellery purchases especially in India, the world's largest buyer.
Spot gold was at $423.50/424.25 an ounce, versus $423.85/424.60 in New York on Thursday, lacking fresh impetus to rise as the euro fell slightly against the US dollar. The euro was at $1.2612, compared with $1.2616 in late US trade.
"There's less buying out of Japan for some reasons. We have expected the demand to continue from there and hold the price at around $425 but that hasn't come into fruition," said one regional dealer.
"The underlying gold price in US dollar terms would be very expensive for people in India to buy. I think they would be hoping for the market to dip," he added. The yellow metal hit a six-month high at $426 in Europe, within striking distance of January's 15-year peak of $430.50, but buying soon faded.
"There's no underlying demand for gold at these levels," said Martin Mayan, associate director at N M Rothschild in Sydney. "(If) we don't have a good close this week, speculators might not come in next week therefore, we can drift back down," he said.
Dealers said they expected gold to trade in $422.50 to $424.50 range for the rest of the Asian session with weakness in Tokyo gold futures weighing on sentiment.
The benchmark August gold contract shed six yen per gram to 1,467 yen. Trading would remain choppy, given high oil prices and uncertainty ahead of the US presidential elections next month.
Some dealers said it was important for gold to close above $425 to $426 in New York if it was to stage a new rally. Dealers pegged key support at $418 and resistance at $428. But large long positions in gold and silver that the Commodity Futures Trading Commission's Commitments of Traders data shows was a worrying factor, traders said.
Open interest in Comex gold rose 5,884 to 311,109 contracts as of October 20. "My concern would be the size of speculative interest on Comex. The funds could dump their positions anytime and we could see a retracement of $8 to $10," said the regional dealer."I think gold would have to have a strong close this week to strengthen the rally, otherwise it will come back to the high of $410s," he said. Spot platinum was at $852/857 an ounce, compared with $846/851 last quoted in New York.
The metal had touched a two-week high at $858 an ounce in Asia, driven by gains in Tokyo platinum futures. Sister metal palladium was at $214/219 an ounce, versus $212/217 in the US market.
Silver was unchanged at $7.27/7.30 an ounce.