The spot gold market rose strongly in Asia and the first-half of European trade on Monday, gaining nearly $3 from Friday's US close to open the week in New York above $658.75 per ounce.
Physical gold bullion prices then dipped at the PM Fix in London, pulling back to $656 per ounce before bouncing against all major currencies.
Beginning a quiet week for global economic data, the morning's 0.5% move versus the Dollar was outstripped by gold priced in Yen as the Japanese currency dropped to ¥123.42 per Dollar, a fresh four-and-a-half year low.
The Yen's latest drop came after Bank of Japan governor Toshihiko Fukui said he wants to see greater traction in the domestic Japanese economy before raising interest rates.
Short-term borrowing costs in Japan have now been set at 0.5% or below for nearly 12 years.
Spot gold priced in Euros also rose more than 0.5% this morning, touching €490 before dipping at the London open.
Gold priced in Pounds Sterling, however, hardly moved. For British investors wanting to buy gold bullion now it held around £332 per ounce as the Pound broke a 10-day high versus the Dollar above $1.9800.
In Asia today, "I don't see aggressive gold buying from the physical side," said Ronald Leung of Lee Cheong Gold Dealers in Hong Kong to Reuters earlier.
"My view is that gold is probably going to be trading in a fairly broad range in the near term," reckoned David Moore at Commonwealth Bank in Sydney. He put gold between $645 and $670 per ounce from here.
Standard Bank's daily report notes that "gold has shown some resilience in its recent trading in the $640s and would likely continue to find support in front of its 200-day moving average, starting from the $643 level.
"[But] upside potential in the gold market would likely be capped at $661 in the interim."
As for the much-vaunted $700 level – a 'key' barrier according to many pundits during gold's 14% rally in early spring this year – "the time window has shifted," says Peter Spina at GoldSeek.com.
"I would not feel comfortable betting against gold at these levels, although it does appear the rally will take a summer vacation."
Speculators in the Tokyo gold futures market disagreed on Monday, pushing the benchmark April '08 contract 1.4% higher to a 10-session high as the Nikkei stock index rose 0.9%.
But Comex gold futures contracts saw a drop of 30% in the total number of long bullish positions in the week ending June 12, the latest data available.
Open interest grew by 7% meantime, and large commercial traders – the "smart money" of refiners and other gold-industry players – cut their net short positions by more than a quarter from the week before.
This group now holds a smaller net short position in gold futures than it did back in January, report ResourceInvestor.com.
With the large commercial traders cutting their bearish opinion in the gold market right now, "the heavy pace of net-short reduction keeps this indicator on the bullish side," it adds.
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