Tokyo gold futures bounced back on Monday, rising nearly 1 percent at one point, as a higher close on New York's Comex and a softer yen prompted buying, while bargain hunting lifted dollar-based gold prices.
Japanese platinum futures backed off by the afternoon trade on profit taking after reaching a new record high in the day given steady demand for the white metal used in automobile catalytic converters. Spot gold fetched $661.75/$662.50 an ounce, compared with $660.90/$662.40 last quoted in New York.
The benchmark most-distant April gold contract on the Tokyo Commodity Exchange rose as high as 2,612 yen, up nearly 1 percent, before ending the day at 2,605 yen ($21.51), up 18 yen from Friday is close of 2,587 yen.
"There's very little reason to sell gold (at the moment)," said Koji Suzuki, a market analyst at Kazakh Commodity Co Ltd US gold futures finished higher on Friday, recovering from the previous two sessions' sharp decline, helped by bargain hunting and higher crude oil prices.
Benchmark TOCOM gold traded in a fairly narrow band after finding solid technical support after falling to a low of 2,587 yen on Friday, but its topside was blocked around the seven-day moving average of 2,611 yen. The strength of TOCOM's rally was unclear as traders said a further correction might be necessary before it could climb another notch.
TOCOM gold is currently trading at a level that is about 3 percent below May 8th's peak of 2,684 yen, which was the highest level since late February. Suzuki said the precious metals market had largely digested Friday's news that China would widen the yuan's trading band and raise interest rates. Some analysts say the move could pressure precious metals in the long run as higher interest rates could dampen production and the US dollar could strengthen against the Chinese currency.
On Monday, the yen hit a record low against the euro after the Group of Eight finance ministers' failure to discuss the Japanese currency's weakness spurred selling. Traders said the yen resumed its broad slide as regional markets reacted calmly after China's surprise decision on Friday.
The dollar traded around 121.23 yen, slightly higher from late on Friday in New York and near a three-month high of 121.39 yen. Benchmark April TOCOM platinum futures contract closed down 19 yen per gram, or 0.4 percent, at 4,983 yen after hitting a record high of 5,039 yen, topping the previous all-time high of 5,031 yen marked on May 14. Spot platinum was at $1,305/$1,310, down from New York levels of $1,307/$1,311 an ounce.