Tokyo gold futures rose to a near one-week high on Monday as the yen's sharp fall against the dollar triggered short-covering by yen-based investors, but a weak dollar-based spot price limited active follow-through. Despite gains in yen-based gold prices, traders said the metal was losing its safe-haven appeal given the dollar's recovery to a six-week high against the euro and a four-and-a-half-month high against the yen.
"TOCOM gold is up due to a weaker yen, but people don't want to chase it too much on rallies now," said Tatsuo Kageyama, analyst at Kanetsu Asset Management.
A lower yen has the effect of increasing the value of yen-based commodity prices, including gold and precious metals.
"The market had built up positions in gold as the dollar slumped but now investors are more keen to pull out funds due to the recent recovery of the dollar," Kageyama said.
The February gold contract on the Tokyo Commodity Exchange closed 6 yen or 0.41 higher at 1,465 yen per gram. It climbed as high as 1,466 yen, the highest since February 22, but met tough technical resistance above 1,470 yen with the 14-day moving average seen around 1,475 yen. At 0651 GMT, spot gold was quoted at $424.20/$424.90 an ounce against $424.40/$425.10 in New York Thursday.
The US market was closed on Friday and reopens on later in the day, after the Easter holiday. Markets in Australia, Hong Kong and London remain closed until Tuesday. The dollar was supported by expectations that the US Federal Reserve would become more aggressive in raising interest rates following last week's credit-tightening. Precious metals traders said the market's attention was focused on the dollar.
"TOCOM prices will come under pressure if dollar-denominated prices fall in overseas trading tonight," said Hiroyuki Kikukawa, associate director Nihon Unicom Corp "But I feel it's too early to say that sentiment for gold has turned bearish. We still need to see the outcome of US jobs data and Japan's tankan figures to judge the trend."
Economists expect the pay-rolls data, due on Friday, to show the US economy created 220,000 jobs in March, down from 262,000 in February, which was the biggest gain in four months.
The Bank of Japan's closely watched tankan survey of business sentiment is also due for release on Friday. Economists generally expect a slight improvement.
The yen's weakness prompted active short-covering in TOCOM platinum, traders said.
Key February futures closed up 20 yen per gram at 2,877 yen. They briefly rose to a session high of 2,894 yen - the highest since March 18 - but the market was reluctant to buy above the closely watched technical level of 2,900 yen.
Below are closing prices for TOCOM's most active precious metals contracts, with the day's turnover for each metal.