Tokyo Commodity Exchange gold futures gathered upward momentum as the dollar-based spot price remained supported, with a weaker yen versus the dollar encouraging Japanese bargain-hunters to step in, although late rounds of profit-taking pulled the contracts down from the day's highs.
"The market is bullish that hasn't changed even after seeing major corrections last week," said Shuji Seagate, assistant manager at Mitsubishi Corporation Futures.
"The market is watching to see whether money from fund operators will pour heavily into the gold market again after the corrections," Sugata said.
The benchmark August TOCOM gold contract closed up eight yen, or 0.46 percent from Friday's settlement, to 1,730 yen, the day's low after profit taking set in late in the session.
Rounds of active bargain hunting lifted the contract by more than 1 percent from Friday to a session high of 1,742 yen. August TOCOM gold had dropped as low as 1,711 yen on Friday, down more than 3 percent from a 14-year high of 1,771 yen reached on October 12.
Still, technical trends were strong after the key contract managed to hold above 1,700 yen last week. In addition, August gold was expected to be solid above its 30-day moving average of about 1,723 yen.
Dollar-based spot gold dropped from its New York highs, but TOCOM gold was supported because the spot price held above its level in Asia on Friday.
Spot gold was trading at $463.75/464.50 an ounce, down from $466.50/467.25 in New York. It was around $462 in Asia on Friday.
On Friday in New York, it had risen more than $5 on safe-haven buying triggered by a bomb scare near the US Capitol building in Washington D.C.
Police questioned two men and destroyed a suspicious package in their car after the pair suggested the vehicle contained an explosive device, US Capitol Police said.
Spot gold was pressured by a stronger dollar against the euro but dealers expected buying interest to resurface around $460. The dollar edged up against the euro from Friday's New York levels, standing at $1.1936/41.
The dollar gained strength on expectations of higher US interest rates. A weaker yen against the dollar, however, buoyed TOCOM gold. A lower yen raises the value of yen-based gold.
The dollar was around 115.70 yen, near a two-year high, late on Monday. "Gold dropped sharply last week, but the market is convinced that sentiment is still bullish," said Konami Gooks, research section manager at Okato Shoji Co Ltd.
"I don't think the correction is over, but spot gold should be well supported around $455-$460 even if we see more downward correction," Gooks said.
TOCOM platinum futures edged up but came off highs on profit taking in line with yen-based gold futures. August TOCOM platinum closed up three yen, or 0.09 percent, at 3,404 yen per gram.
It moved in a range of 3,397 to 3,442 yen. Other contracts closed down four yen to up seven-yen.