PRECIOUS-Gold takes breather; Tokyo gold strikes record high

Fri Jan 11, 2013 2:43am EST

* TOCOM gold hits record high on yen weakness
    * Spot gold may fall to $1,666 before rising again
-technicals
    * Coming Up: U.S. Nov. international trade; 1330 GMT

 (Updates prices)
    By Rujun Shen
    SINGAPORE, Jan 11 (Reuters) - Gold inched lower on Friday
but was headed for its biggest weekly rise in more than a month,
following a decision by the European Central Bank to keep rates
unchanged despite signs of stabilisation in the battered
economy.
    Japan's gold market jumped into the spotlight as benchmark
Tokyo gold futures hit a record high of 4,820 yen a gram
($1,699.62 an ounce) after the yen dropped to a 2-1/2-year low
against the dollar on expectations of more monetary easing by
the Bank of Japan.  
    Spot gold eased 0.1 percent to $1,672.44 an ounce by
0725 GMT, after rising 1 percent in the previous session when it
tracked the euro rally after the ECB kept rates unchanged and
said the euro zone economy would recover later in 2013.
 
    Bullion was on track for a 1-percent weekly rise, after
falling for five of the past six weeks.
    U.S. gold inched down 0.3 percent to $1,672.80.
    "The record-high gold prices in yen have triggered some
liquidation from Japanese customers, which is putting pressure
on the market," said Peter Fung, head of dealing at Wing Fung
Precious Metals in Hong Kong.
    Gold is likely to test the $1,700 level, and will find solid
support at $1,660, around the 200-day moving average that it
breached on Thursday.
    Buying of physical gold from China continued to underpin
market sentiment, as purchases have picked up before the Lunar
New Year, when sales of jewellery, bars and coins increase. 
    China, which is vying with India to be the world's top gold
consumer, reported annual consumer inflation accelerated to a
seven-month high in December. High inflation has driven gold
buying in the past. 
    Technical analysis suggested that spot gold could retrace to
$1,666 an ounce during the day before rising towards $1,691,
said Reuters market analyst Wang Tao. 
    
    
    
    The dollar index inched up, after dropping nearly 1
percent in the previous session after the ECB decision fuelled
the euro's 1.6-percent rally, its strongest one-day rise in more
than five months. 
    A stronger greenback puts pressure on dollar-priced
commodities by making them more expensive for buyers holding
other currencies.
    Platinum and palladium held up better than gold and silver,
even after posting impressive gains in the previous session, as
expectations of a recovering global economy continued to drive
investors to metals with industrial applications.
    More Americans filed new claims for unemployment benefits 
last week, but details of the report suggested the jobs market
continued to grow at a moderate pace. Other data indicated the
economy remained on a steady growth path, with sales at
wholesalers rising by the most in more than 1-1/2 years in
November. 
    Spain's first debt auction of the year attracted strong
bids, sending its benchmark bond yields to 10-month lows on
Thursday, as appetite for high-yielding assets improved.
 
    Spot platinum rose half a percent to $1,630.90, on
course for a 4.7-percent weekly rise in its second week of
climbs, leading the weekly performance of precious metals. 
    Spot palladium inched up 0.2 percent to $698, headed
for a 1.7 percent weekly gain. 
    
 
 Precious metals prices 0725 GMT
  Metal             Last    Change  Pct chg  YTD pct chg    Volume
  Spot Gold        1672.44   -2.20   -0.13     -0.13
  Spot Silver        30.77   -0.05   -0.16      1.62
  Spot Platinum    1630.90    8.10   +0.50      6.25
  Spot Palladium    698.00    1.70   +0.24      0.87
  COMEX GOLD FEB3  1672.80   -5.20   -0.31     -0.18        18708
  COMEX SILVER MAR3  30.80   -0.12   -0.40      1.87         5902
  Euro/Dollar       1.3267
  Dollar/Yen         88.98
  COMEX gold and silver contracts show the most active months
 ($1 = 88.2000 Japanese yen)

 (Editing by Miral Fahmy)
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