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Asian gold lower in afternoon after Japanese sales

HONG KONG: Asian spot gold fell on Monday in quiet trading after currency-related selling from Japan, but the price could test higher amid slightly improved sentiment.

Gold bullion was quoted at US$278.50/279.00 per ounce late on Monday compared to New York's previous close at US$278.70/279.20 on Friday.

Gold gained on short-covering early in the Asian day but ran into Japanese selling after the dollar/yen rate climbed on Bank of Japan intervention in the foreign exchange market.

The dollar was quoted at 104.88 yen late in the Asian day compared with around 102 yen on Friday.

Currency traders said the Japanese central bank bought dollars to restore stability. Earlier, a survey showed improvement in business sentiment in Japan and the government confirmed that Prime Minister Keizo Obuchi had suffered a stroke.

The gold market also saw selling from Australian dealers taking profits in quiet trading. Sentiment was slightly better after gold's recovery in New York on Friday.

"We are stuck between US$278 and US$280. Gold is looking for further direction from Europe and COMEX later on," a trader said.

Gold was finding support at US$278 and was likely to test US$280.50 in the short term. If the price could break the US$280 level, a move to US$283 or US$285 was likely, traders said.

Hong Kong's Chinese Gold and Silver Exchange will be closed on Tuesday for a public holiday.

Spot silver was quoted at US$5.00/03 an ounce after closing in New York at US$5.00/02 on Friday.

Local tael gold was quoted HK$3 down at HK$2,589.

The carry over charge at the Chinese Gold and Silver Exchange Society was -2, up from its previous fix at -6.-Reuters