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  • Oct 26th, 2005
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Tokyo gold futures advanced for a second consecutive session on Tuesday as firmer dollar-based spot prices and limited falls in oil prices induced steady bargain-hunting by Japanese investors.

Sentiment stayed bullish with benchmark crude oil holding around $60 a barrel, keeping inflation concerns alive, but gold was generally confined to range trading as the market awaited next week's US Federal Reserve policy-setting meeting.

Until the market finds a distinct trend, traders will focus on energy prices and currencies for direction.

"An upward trend is still there, although the market is turning slightly range-bound," said Hiroyuki Kikukawa, associate director at Nihon Unicom Corp.

"Japanese prices were helped by a firmer dollar-based price as crude oil was supported around $60 and as the dollar slowed its gains," Kikukawa said.

Benchmark August gold on the Tokyo Commodity Exchange closed up eight yen, or 0.46 percent, at 1,738 yen per gram from Monday's settlement of 1,730 yen.

It moved in a range 1,731 to 1,741 yen. Other contracts closed up six to nine yen. The benchmark contract faced some trouble breaking through on Monday's high of 1,742 yen, and there was a major resistance at a 14-year high of 1,771 reached almost two weeks ago. Japanese trading houses were rumoured to be lining sell orders near the 14-year high, traders said. Spot bullion was quoted at $465.90/466.70 an ounce against $465.00/465.70 in New York.

Traders were nervous about chasing gold too strongly on rallies, especially ahead of the Fed meeting, as net long positions in the New York market were still very large.

The non-commercial net long position in New York's Comex gold futures fell to 170,424 contracts as October 18, from 177,410 a week, according to the latest weekly CFTC Commitments of Traders report issued last on Friday.

TOCOM platinum futures rose across the board as speculative buying emerged due to a bullish technical trend. August platinum closed at 3,425 yen, up 21 yen or 0.62 percent from Monday's close of 3,404.

It moved in a range of 3,413 yen to 3,430 yen, which was not far from a 19-year high of 3,457 yen reached on October 13. Other contracts closed up 13 to 24 yen.

Traders said, however, that the market was nervous about taking big positions ahead of a closely watched interim report by London-based precious metals refiner Johnson Matthew on November 15.

Copyright Reuters, 2005


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