PRECIOUS-Gold inches up on Japan easing hopes

Mon Jan 21, 2013 2:35am EST

* Tokyo gold matches high on sinking yen
    * Spot gold aims at $1,706/oz -technicals
    * Coming up: Germany producer prices, Dec; 0700 GMT

 (Updates prices)
    By Rujun Shen
    SINGAPORE, Jan 21 (Reuters) - Gold inched up on Monday to
reverse losses from the previous session, bolstered by
expectations for aggressive monetary easing from the Bank of
Japan.
    The central bank may consider making an open-ended
commitment to buy assets until a 2-percent inflation target is
in sight at a policy meeting ending on Tuesday, driving the yen
to a 2-1/2-year low and pushing Tokyo's benchmark gold 
to match a record of 4,911 yen a gram. 
    Monetary stimulus from central banks helped gold extend its
bull run into a twelfth year in 2012, with investors fleeing to
hard assets on worries that rampant cash printing would prompt
currency debasement.
   "There is attention on the Bank of Japan, which is really
being pressured to embark on some very precious metals-friendly
policy," said a Hong Kong-based trader.
    Decent physical buying interest in Asia is also supporting
prices, he added.
    The upcoming Lunar New Year festivities in Asian countries
including China, which is vying with India to become the world's
top gold consumer, have pushed up physical gold demand since the
start of the year. That is likely continue for the next couple
of weeks or so, with the Lunar New Year falling on Feb. 10.
 
    Spot gold had risen 0.4 percent to $1,689.32 an ounce
by 0704 GMT, after gaining 1.3 percent last week.
    U.S. gold inched up 0.1 percent to $1,689.30.
    Technical analysis suggested spot gold is still targeting
$1,706 an ounce during the day, as indicated by its wave pattern
and a Fibonacci projection analysis, said Reuters market analyst
Wang Tao. 
    
    
    Japan has been a net gold seller in the past few years, but
more aggressive monetary policy could revive long-dormant
interest in buying the yellow metal, analysts said.
    "If you start to see inflationary pressure and negative
interest rates in Japan, people will be thinking about how to
protect their savings," said Nick Trevethan, senior commodity
strategist at ANZ in Singapore, adding that the lack of suitable
investment products in the market is likely to drive investors
back to gold.
    Trading interest in precious metals picked up in the week to
Jan. 15, with open interest and net long positions rising across
precious metals, according to data from the U.S. Commodity
Futures Trading Commission. 
    Signs of progress in the U.S. debt ceiling talks also helped
underpin prices. 
    Investors will be closely watching the U.S. Federal
Reserve's policy meeting next week for clues on the central
bank's attitude towards its monetary stimulus. Any indication of
withdrawal of such policy would deal a blow to bullion. 
    "There is decent appetite for buying on dips, but I don't
know how long it will last because the Fed is coming up and
people will get a little skittish about being over-exposed ahead
of the FOMC (Federal Open Market Committee) meeting," said the
Hong Kong-based trader.    
    Spot palladium, which rose to a 16-month low of
$730.47 in the previous session, eased 0.2 percent to $715.97.
    
    Precious metals prices 0704 GMT
  Metal             Last    Change  Pct chg  YTD pct chg    Volume
  Spot Gold        1689.32    5.98   +0.36      0.88
  Spot Silver        31.88    0.04   +0.13      5.28
  Spot Platinum    1671.49    4.24   +0.25      8.89
  Spot Palladium    715.97   -1.75   -0.24      3.46
  COMEX GOLD FEB3  1689.30    2.30   +0.14      0.81        13367
  COMEX SILVER MAR3  31.89   -0.04   -0.13      5.49         4420
  Euro/Dollar       1.3317
  Dollar/Yen         89.58
  COMEX gold and silver contracts show the most active months
 
 (Editing by Joseph Radford)