Tokyo gold futures inched down on Tuesday tracking New York gold's decline, but prices largely stayed within recent ranges in the absence of fresh news to provide direction. Some market participants also said trade would be cautious ahead of a batch of economic data, which could provide clues about whether the Federal Reserve might boost interest rates next week.
The benchmark most-distant June gold contract on the Tokyo Commodity Exchange finished down 12 yen per gram at 2,360 yen, after moving between 2,354 yen and 2,375 yen.
The key contract has managed to stay above a key 2,300-yen level despite last week's sell-off, although traders say it will face stiff resistance this week at 2,400 yen.
Other months fell by 11 to 15 yen. "I think we're in the summer doldrums it's really quiet today," one trader said, adding the market lacked direction. Total gold turnover on TOCOM was estimated to have fallen to 76,457 lots, down from Monday's 98,559 lots. Trading volume has mostly been on a downtrend since last Monday when turnover amounted to a healthy 160,412 lots.
News of fighting between Israeli and Hizbollah forces continues to have the potential to lift gold, which often attracts safe-haven buying, but some traders said the conflict has largely been woven into the market at least for now.
Israel launched air strikes against Lebanese border villages on Tuesday, the second day of what it said would be a 48-hour halt to aerial bombardment against the south, Lebanese security sources and witnesses said.
At least 598 people have been killed in Lebanon, although some estimates put the toll at 750, including bodies still buried under the rubble. Fifty-one Israelis have also been killed in the violence, which began on July 12. Spot gold was fetching $633.50/$634.50 an ounce at TOCOM's closing bell, compared with $634.70/$635.45 last quoted in New York.
Bullion drifted lower after briefly topping $637. Dealers said gold was likely to face stiff resistance at $650 even though some investors could be tempted to ditch the dollar and buy gold following comments on the rate outlook by Fed officials. Gold's downside target was pegged around $620. Gold futures in New York settled a touch lower on Monday on end-of-the month book squaring, after bullion prices were pressured in lacklustre, range-bound trade in Europe. Benchmark December delivery gold slid $1.00 to end at $646.80 an ounce at the COMEX division of the New York Mercantile Exchange.
In the currency market, the dollar stayed in sight of a three-week low against the yen on expectations the Federal Reserve will refrain from raising interest rates again next week.
Traders said the market is in a wait-and-see mood ahead of a batch of US data this week. The dollar was fetching 114.64/114.67 yen at 0630 GMT, against 114.62/114.66 yen in late New York trade. The US currency fell to a low of 114.19 yen on Monday on electronic trading platform EBS, the lowest since July 12.
TOCOM platinum bucked the mostly bearish trend, as it tracked the rise in New York futures. Benchmark June platinum futures contract closed at 4,463 yen, up 11 yen from the previous day. Spot platinum was at $1,227/$1,232, compared to late New York levels of $1,228/$1,234 an ounce.