Gold stayed on the defensive on Monday, with investment funds nervous about taking new positions due to recent losses in global equities markets, while Japanese platinum futures fell by 2 percent, hitting their daily limit.
Falling share prices have forced investors to lighten positions in risky assets, including commodities, until the situation in the stocks market stabilises, traders said. Yet bullish oil prices and the dollar's weakness against the yen could limit falls in gold and other precious metals. "Buyers are taking a wait-and-see stance.
They don't want to take risks now when share prices are unstable," said Tatsuo Kageyama, analyst at Kanetsu Asset Management in Tokyo. "In this bearish mood, gold could weaken further in the near term."
Spot gold dipped to $660.80/661.50 an ounce from $661.40/662.20 traded late in New York on Friday after it fell as far as $656.90 the lowest since July 9. Gold was below the 100-day moving average of around $665. The next important support would be the 200-day average of $650. Tokyo gold futures fell to their lowest level in almost four months pressured by the recovery of the yen over the last week. The benchmark June 2008 contract on the Tokyo Commodity Exchange closed the session at 2,545 yen per gram, down 20 yen or 0.8 percent from Friday's level.
It fell as far as 2,542 yen the lowest for the benchmark since April 3. TOCOM platinum futures plunged on active fund selling to catch up with falls in the dollar-based spot price on Friday. Profit-taking pressure in platinum grew particularly after Nissan Motor Co said on Friday it has developed a catalyst for gasoline cars that halves the use of precious metal components to clean tail-pipe emissions.
"The market took Nissan's news as a good chance to take profits in platinum, which has been pegged at a high level for a while," Kanetsu's Kageyama said. Automotive catalysts use a mix of platinum, rhodium and palladium to trigger a chemical reaction with polluting nitrogen oxide, carbon monoxide and hydrocarbons to create non-toxic compounds.
The technology, which will be shared with French partner Renault SA will be introduced in a new vehicle, slated for launch in the second half of the business year ending in March 2009, and expanded into other models, Nissan said. Key June 2008 TOCOM platinum futures fell by the daily 100-yen limit to 4,899 yen per gram, down 2 percent from Friday's close. It was the lowest level for any benchmark since May 31.
TOCOM platinum was pegged at the level throughout the trade. Spot platinum was trading at $1,281/1,286 per ounce, up from $1,271/1,276 in late New York trade on Friday. It fell to a session low $1,264. Palladium fell to $358/363 an ounce from $360/364 on Friday. Silver was little changed at $12.68/12.73 an ounce from late New York levels.