The key Tokyo gold futures contract fell 0.75 percent on Friday as a slide in crude oil prices due to rising US stockpiles lessened inflation concerns and prompted Japanese investors to lighten positions ahead of the weekend.
The Tokyo Commodity Exchange gold f 18 yens per gram at 2,379 yen after touching a one-week low of 2,370 yen. "Precious metals were dragged down by a fall in crude oil prices," said Noriyuki Nakagawa, analyst at Livedoor Commodity Co Ltd. "But if crude oil stops falling near $56 (per barrel), buyers would return to the market, in particular to gold," he said, after US crude oil futures fell more than 4 percent to $56.26 per barrel in New York on Thursday, the lowest settlement in a year.
Some analysts disagree. Hisaaki Tasaka, market analyst at Ace Koeki Co Ltd, said a downside correction for the October gold contract to around 2,300 yen was likely before the market tests higher ground again.
Technical sentiment weakened slightly after the key contract dropped below a near-term trend line of 2,391 yen, which is a seven-day moving average. It was barely above the 14-day moving average around 2,370 yen. Cash gold edged lower in Asian trading on Friday after the dollar rose for a second day as US data showed a slowdown in inflation, reinforcing views that the Federal Reserve will keep interest rates steady.
Gold was at $617.50/618.40 an ounce, against $618.00/619.00 late in New York on Thursday. Gold fell nearly $6 in the US market after the dollar strengthened as the US government said consumer prices fell by a greater-than-expected 0.5 percent in October.
A stronger dollar usually pressures gold, which is generally priced in dollars globally, as it makes gold costlier in key overseas trading areas such as Europe and Asia, but it could be potentially positive for yen-based gold prices. TOCOM platinum fell to a one-week low as the market continued to reduce long positions after sharp gains last week.
Platinum came under pressure after a report by Johnson Matthey released in the week. Johnson Matthey, the world's biggest distributor of platinum, said on Tuesday in its Platinum 2006 Interim Review that supply and demand for platinum are likely to reach record levels in both 2006 and 2007, leaving the global market close to balance.
October TOCOM platinum closed down 48 yen or 1.1 percent at 4,317 yen a gram from Thursday's close. On Monday, it hit a two-month high of 4,440 yen. "Platinum has fallen from highs, but I feel it's still pretty much supported," Tasaka said.