Tokyo gold futures advanced to a fresh 1-1/2 month high on Thursday but gains were capped by light profit-taking as the market lacked fresh incentives to convince fund operators to build more long positions. Traders were careful about selling gold heavily given lingering geopolitical concerns as tensions rise over the nuclear ambitions of Iran and North Korea. WE Federal Reserve Chairman Alan Greenspan also supported gold, as the outlook for the dollar remained unclear after comments the previous day.

December gold on the Tokyo Commodity Exchange (TOCOM) hit a session high of 1,445 yen the highest since December 28 but the market struggled to extend gains since the contract had jumped more than 4 percent in less than 10 trading sessions.

"Gold has turned bullish based on technical trends but the market lacks new factors to buy more," said Tatsuo Kageyama, analyst at Kanetsu Asset Management.

Key TOCOM gold futures closed up one yen at 1,442 yen.

Other contracts closed unchanged to up two-yen. Having broken through this year's high of 1,442 yen, the market is looking at 1,457 yen, which is the 100-day moving average, as the next key technical level.

Spot bullion was quoted at $424.50/5.25 an ounce against $425.50/6.20 in New York. The dollar was quoted at 105.31/32 yen from 105.42 yen in New York, and $1.3042/45 against the euro, also little changed from late US trade. Gold traders said Greenspan's testimony before the Senate Banking Committee failed to move the dollar or gold as his comments were in line with market expectations. Greenspan said US interest rates remained "fairly low" at 2.5 percent after six consecutive rate rises by the Federal Reserve since June.

The December TOCOM platinum contract closed down six yen at 2,829 yen per gram. It had moved in a range of 2,808 to 2,834.

Copyright Reuters, 2005