January 31, 2013 / 3:30 AM / 8 years ago

PRECIOUS-Gold holds near 1-wk high on Fed; TOCOM hits record

* Tokyo gold hits record of 4,944 yen a gram on weak yen
    * Gold to drop to $1,659-$1,664 range -technicals
    * Coming up: weekly jobless claims; 1330 GMT

 (Updates prices)
    By Lewa Pardomuan
    SINGAPORE, Jan 31 (Reuters) - Gold edged up on Thursday and
held near its highest in a week, supported by signs of a
recovery in the euro zone and by expectations the U.S. dollar
could lose its footing after the Federal Reserve decided to keep
buying bonds.
    Previous rounds of asset purchases by the Fed drove down
interest rates and weakened the greenback, spurring rallies in
global stocks and prompting investors to turn to gold as a hedge
against inflation.
    Gold had risen 0.2 percent to $1,680.06 an ounce by
0630 GMT. It hit a near one-week peak of $1,683.39 on Wednesday,
although that was still well below a record of around $1,920
marked in September 2011.
    "The Fed will maintain its bond-buying policy and we see
economic conditions in the euro zone improving slightly. I think
we can see more weakness in the U.S. dollar and as a result we
may see gold going up a bit more," said Joyce Liu, investment
analyst at Phillip Futures in Singapore.
    U.S. gold was little changed at $1,679.50 an ounce. 
    Gold is still facing strong resistance at $1,700, which it
failed to breach despite repeated attempts earlier in the month,
Liu and other analysts have said.
    Technical analysis suggested spot gold could drop to
$1,659-$1,664 range during the day, as it has completed a
rebound from Monday's low of $1,651.93, said Reuters market
analyst Wang Tao. 
    The Fed left in place its monthly $85 billion bond-buying
stimulus plan while indicating a recent stalling in U.S.
economic growth was likely temporary. It also repeated a pledge
to keep purchasing securities until the outlook for employment
"improves substantially". 
    The euro held near a 14-month peak against the
dollar, while the yen tumbled to its weakest in more than two
years against the U.S. currency, sending the most active gold
contract on the Tokyo Commodity Exchange to a record high.
     TOCOM's December contract, which marked 4,944 yen a
gram, has climbed more than 6 percent this year on a weakening
yen after Prime Minister Shinzo Abe called on Japan's central
bank to ease policy more aggressively.
    "Of course a weaker yen attracts buyers, but I think we
shall wait for the price to hit 5,000 yen before we see some
selling," said a dealer in Tokyo. 
    In the physical market, gold purchases lost steam this week
as stockpiling in China and other Asian markets ahead of the
Lunar New Year drew to a close and as Indian buyers remained on
the sidelines, with ample inventory in hand. 
      Precious metals prices 0630 GMT
  Metal             Last    Change  Pct chg  YTD pct chg    Volume
  Spot Gold        1680.06    3.36   +0.20      0.33
  Spot Silver        32.08    0.06   +0.19      5.94
  Spot Platinum    1680.75   -1.49   -0.09      9.50
  Spot Palladium    745.92   -0.83   -0.11      7.79
  COMEX GOLD FEB3  1679.50   -0.40   -0.02      0.22          609
  COMEX SILVER MAR3  32.11   -0.07   -0.22      6.20         3776
  Euro/Dollar       1.3563
  Dollar/Yen         90.90
  COMEX gold and silver contracts show the most active months
 (Additional reporting by Rujun Shen; Editing by Joseph Radford
and Muralikumar Anantharaman)
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