Gold held steady on Monday and was within sight of a five-week high hit last week but overall trading was sluggish in the absence of Japanese investors. Other precious metals were mostly higher, with silver hovering near on Friday's three-week highs. Tokyo's precious metals futures were closed for the Marine Day holiday.
Spot gold hit an intrude high of $667.40 an ounce on firm oil prices before dipping slightly to $667.25/668.00, steady from $666.60/667.40 late in New York on Friday. The metal rallied to its highest level since June 7 at $669.05 last on Thursday as the US dollar tumbled to a record low against the euro, making dollar-priced gold cheaper for holders of other currencies.
But gold remained below this year's high of $693.60 hit in April as attempts to approach $700, a level last seen in May 2006, were met by profit taking. Surging stock markets have also encouraged investors to shift some of their money. Gold hit a 26-year high of $730 last may.
"Indeed, gold has now continued to rise as concerns over the US supreme mortgage market mount, but we have also seen the correlation break down at times recently and, as such, a sudden deterioration in financial markets could well see a sell-off in gold too," said Invested Australia in a daily report.
"Gold's future hangs in the balance. It appears that gold's fortunes are now increasingly tied to general investment flows across many financial markets," it said.
Most active June 2008 gold futures on the Tokyo Commodity Exchange ended 20 yen per gram higher at 2,654 yen on Friday. The dollar was steady at $1.3789 against the euro, having fallen to a record low of $1.3815 on Friday amid fears the US supreme mortgage crisis could scare off foreign investors away from US credit markets.
Dealers are awaiting Federal Reserve Chairman Ben Banana's testimony to the US Congress on Wednesday and Thursday, plus the minutes of the latest Fed meeting on Thursday.
Investors will be particularly interested in whether Banana or the Fed will acknowledge any significant impact of the supreme mortgage crisis on the US economy, which could reduce the bank's current focus on inflation. "Some people are buying gold because of a slight increase in oil prices but the market has been stuck in a range in the last couple of days.
I guess things will depend on the dollar movements," said a dealer in Hong Kong. "I think $665 to $670 will be today's trading range. People will be waiting for Banana's speech," he said. Brent crude oil prices held near 11-month highs on Monday after rising more than 1.5 percent in the previous session on supply worries due to North Sea production problems and US refinery outages.
Platinum rose to $1,312/1,317 an ounce from $1,310/1,314 late in New York. Silver edged up to $13.05/13.08 an ounce from $13.00/13.05 an ounce, but off on Friday's three-week high of $13.14 an ounce. Palladium was little changed at $366/371 an ounce.