Tokyo gold futures ended lower on Friday as an extended fall in the cash price below $660 an ounce triggered technical selling, but platinum futures were dealt less of a blow as wage talks began at top mines in South Africa.
Spot gold was little changed after it fell as low as $653.40 an ounce the previous day, a two-month low. It traded at $657.65/658.25, compared with $657.30/658.80 late in New York.
South Africa's Anglo Platinum Ltd, the world's biggest platinum producer, said in an interview with Reuters on Thursday that it hoped to reach a deal in pay talks with unions and avoid a strike. "South Africa's latest policy drive together with a boom in commodity prices would make it a tough one for employers to decide on wages this year," said Yuki Sonoda, adviser at Daiichi Commodities Co Ltd.
South Africa's government recently called for a review of black economic empowerment rules originally aimed to give the black majority a bigger slice of the economy. "It's one of the key conditions we should consider in the mid to long term to gauge the metal's supply side," Sonoda said. The benchmark gold futures contract for April 2008 delivery on the Tokyo Commodity Exchange fell 21 yen a gram or 0.8 percent to 2,587 yen ($21.33), the day's low and just a hair above a six-week low of 2,586 yen marked on Friday.
The April contract moved in a range of between 2,587 and 2,598 yen. Analysts said the sell-off in gold was due to a firming dollar versus the euro, and also on lower demand as reflected in continued sales by exchange traded funds.
A stronger dollar makes gold, which is priced in dollars, more costly for holders of other currencies. "Spot gold stayed under pressure from a consolidation in the euro, and the Tokyo market followed suit," said Hiroyuki Kikukawa, associate dictator at Nihon Unicom Inc.
"When the euro stops falling is carefully awaited," he said. The euro slipped to around $1.3490 on Friday, edging towards a one-month low of $1.3462 hit late last week. The dollar was helped by data on Thursday showing that manufacturing activity in the US Mid-Atlantic region accelerated in May.
Platinum futures fell in line with gold futures, with the key April contract declining 15 yen a gram or 0.3 percent to 5,002 yen. It moved in a range of between 4,997 and 5,016 yen.
The TOCOM market remained in Backwardation due to concerns of a near-term supply shortage in part due to wage talks in South Africa. Backwardation is a market condition where prices for nearby months are higher than for later months.
The nearby June contract was down 2 yen at 5,117 yen. The spread between the two contracts expanded on Friday after narrowing to 102 yen on Thursday, the smallest since May 2.
On Monday, the April contract touched a record high for any benchmark of 5,031 yen, bolstered by hopes for a boom in exchange-traded funds. Spot platinum stood at $1,303/1,307 an ounce, versus $1,300/1,305 in late New York. Cash palladium traded at $359/363 an ounce, up from $356/360 in New York, and silver was little changed at $12.80/12.84 an ounce.