Tokyo gold futures wiped off early gains to close slightly lower on Wednesday as investors locked in profits from recent gains ahead of a US Federal Reserve policy-setting meeting.
The most active December contract on the Tokyo Commodity Exchange closed at 2,536 yen ($20.91) per gram, down 0.1 percent or 2 yen from the previous close. Profit taking kicked in after the contract earlier rose as high as 2,555 yen, matching an eight-month high reached last Wednesday.
"It's time to lock in profits now that most of the distant months climbed up to their highs," said Hitoshi Inagawa, senior manager at Yutaka Shoji Co Ltd "Also, investors are braced for key events ahead, including the Fed's meeting and the G7. It looks that chances are looming the yen could stop its downtrend," he said.
The Japanese currency gained ground against major currencies in late Tokyo trade on Wednesday as wariness before a meeting of Group of Seven industrialised nations in Essen next week prompted dealers to trim yen short positions. The yen's slump to record lows against the euro has stoked European fears of a disadvantage in their exports.
The euro was quoted around 157.25 yen in late Tokyo trade, off a record high above 158 yen marked last week. The dollar traded around 121.40 yen, slightly down from 121.61/121.65 yen in late New York and off the 122.20 yen hit on Monday, its strongest since December 2002. Investors are also awaiting a Federal Reserve policy statement later in the day, with traders focusing on whether the Fed has become more optimistic on the economy.
The US central bank is widely expected to keep interest rates unchanged at 5.25 percent when it concludes its two-day meeting on Wednesday. A lower yen effectively raises the value of yen-based commodities prices, including precious metals. A Tokyo analyst said gold is expected to rise further although it is not likely to sprint higher in a single rally. "The bigger picture is for yen-based gold to touch 2,600 yen, and dollar-based gold to hit $650-$660, but the question is how and when that will happen," he said.
India's first gold exchange-traded fund is set for sale between February 15 and February 23, the asset manager of the fund, Benchmark Asset Management Company Pvt Ltd, said on Wednesday. The widely anticipated move is expected to boost investment demand for gold, a currency alternative.
Bullion was mostly steady from New York levels. Spot gold was fetching $645.10/$646.10 an ounce as of 0712 GMT, compared with $645.30/$646.30 in late New York trade. Elsewhere on Tocom, profit taking dragged down platinum futures, but silver futures made gains.
Key December platinum futures finished at 4,489 yen per gram, down 14 yen or 0.3 percent from the previous close. Spot platinum was also weaker at $1,165/$1,170 per ounce. The key December silver futures contract finished at 518.6 yen per 10 grams, up 4.6 yen or 0.9 percent. Spot silver was little changed at $13.26/$13.33 an ounce.