Tokyo gold futures extended losses on Tuesday, pressured by weakness in the dollar-denominated spot price and as a strong US currency undermined overall sentiment and prompted fund operators to unload more positions. Although yen-based gold futures on the Tokyo Commodity Exchange received some support from a weaker yen, sentiment for TOCOM prices was bearish as they dipped below several technical levels, traders said.
The benchmark June TOCOM gold contract closed down one yen, or 0.07 percent, at 1,536 yen per gram. It had moved in a range of 1,529 to 1,536.
Other contracts closed down two yen to up one yen. The June contract was down about 1.4 percent from a 13-year high of 1,556 yen reached on Thursday and Friday.
"Sentiment has turned completely bearish," said Akira Doi, director at Daiichi Commodities Co Ltd. "There are more fund operators who want to liquidate their longs, which should weigh heavily on prices."
Spot bullion struggled in Asia after plunging around $10 per ounce on Friday as the dollar's broad-based rally depressed market sentiment.
Spot gold was quoted at $425.80/$426.35, compared with $427.30/$428.00 in London on Monday.
US markets were closed for the Independence Day holiday on Monday. The dollar rallied to a 14-month high against the euro late on Tuesday in Asia, as the market stayed focused on the greenback's widening interest rate advantage against other currencies. The dollar hit a fresh 11-month high of 111.96 yen. The euro was at $1.1872/75, after falling to $1.1869, it's lowest level since mid-May 2004.
A rising dollar tends to weigh on the precious yellow metal because it makes dollar-priced gold more expensive for holders of other currencies, reducing its appeal.
"It seems funds are shifting their portfolios into the dollar and oil," Doi said. "Gold is expected to test towards $420, with plenty of long holders waiting to sell above $430."
Traders said gold could be vulnerable as there were fewer buyers willing to buy the metal on dips now that the wedding season in India is over and demand for physical gold customarily slows during the summer holidays.
Physical gold buying from India and the Middle East was a key force that limited falls in March and May, traders said. TOCOM platinum edged down but a weaker yen prevented the white metal from falling sharply, traders said.
The key platinum contract has been well bid since finding support at 3,016 yen per gram last on Wednesday and again on Monday. Platinum futures closed down one yen, or 0.03 percent, at 3,036 yen.
They had moved in a range of 3,028 to 3,043 yen. Other platinum contracts closed five to 10 yen lower. Below are closing prices for TOCOM's most active precious metals contracts, with the day's turnover for each metal.