April 21, 2008 / 10:18 AM / 11 years ago

UPDATE 2-Gold rebounds after sell-off, investors buy

(Updates to Tokyo close, adds comments)

By Risa Maeda

TOKYO, April 21 (Reuters) - Gold rebounded on Monday, bolstered by light buying on dips by Japanese investors.

Spot gold XAU= was at $919.20/919.90 per ounce at 0900 GMT after falling more than $20 to $916.40/917.20 by late New York trade on Friday, hurt by a rising dollar and an upbeat U.S. stock market.

Citigroup Inc (C.N) fuelled a rally on Wall Street on Friday as investors took comfort that the No.1 U.S. bank was taking aggressive steps to resolve credit problems that led to its latest quarterly loss.

Last week, gold climbed as high as $952.60, the highest level since March 28. Gold is traditionally seen as a safe-haven asset when volatility rises in other markets.

“Gold’s charm as a hedging asset is declining as concerns about a credit crisis in the U.S. are waning,” said Hitoshi Inagawa, senior manager at Tokyo-based commodity brokerage Yutaka Shoji Co’s corporate investment and service division.

“But some investors resumed buying, resulting in the resilience in the Tokyo market,” he said.

The most active U.S. gold futures contract for June delivery GCM8 on the COMEX division of the New York Mercantile Exchange also bounced back in Asia, rising $7 to $922.20 per ounce.

But gold’s topside was capped by a weakening euro against the dollar after hitting an all-time high of $1.5985 last week.

The euro edged up to $1.5865 EUR= from around $1.5810 on Friday. The dollar was little changed at 103.60 yen JPY=.

Elsewhere, U.S. crude oil futures were little changed after striking a record high of $117.40 per barrel in late Asian trade.

U.S. light crude for May delivery CLc1 was at $117.00, up 31 cents from the New York close.

The benchmark February gold contract <0#JAU:> on the Tokyo Commodity Exchange fell 44 yen a gram to 3,089 yen in a delayed reaction to the metal’s fall late last week.

Spot platinum XPT= was little changed at $2,035/2,045 an ounce from Friday’s late New York levels of $2,035/2,050.

The benchmark February platinum contract <0#JPL:> fell 53 yen a gram to 6,607 yen. The TOCOM market came under pressure as some traders sold the February contract and bought cash platinum to arbitrage, said a manager at a Japanese trading house.

Analysts said, however, fundamentals of platinum were bullish in the mid to long term as South Africa, the world’s biggest producer, struggled with a power crisis which has forced state power utility Eskom [ESC.UL] to implement nationwide power cuts.

Platinum is mainly used to clean vehicle exhaust fumes and to make jewellery.

“The situation in South Africa stays uncertain, with visibility low in terms of politics and the power generation problem,” said Yuki Sonoda, adviser to the president at Japanese brokerage Daiichi Commodities Co.

“Japanese auto makers are expected to return to the market to buy platinum around May ... I think a level around $2,000 or lower would be a bargain for them,” he said.

Spot palladium XPD= was $455/460 an ounce, up from $450/455 in late New York on Friday, and silver XAG= was little changed at $17.85/17.90 an ounce from $17.87/17.92 on Friday. Precious metals prices at 0908 GMT Metal Last Change Pct chg YTD pct chg Turnover Spot Gold 918.55 2.55 +0.28 10.31 Spot Silver 17.85 0.01 +0.06 20.85 Spot Platinum 2025.00 -10.00 -0.49 33.22 Spot Palladium 455.00 4.50 +1.00 23.64 TOCOM Gold 3089.00 -44.00 -1.40 0.95 61046 TOCOM Platinum 6607.00 -53.00 -0.80 23.75 25061 TOCOM Silver 599.40 -13.50 -2.20 10.79 818 TOCOM Palladium 1547.00 -1.00 -0.06 14.51 1767 Euro/Dollar 1.5859 Dollar/Yen 103.61

Editing by Chris Johnson

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