TOKYO, Apr 5 (Reuters) Gold retreated slightly on Wednesday following losses in New York, but market sentiment remained bullish as funds were keen to diversify into precious metals given a firmness in oil prices.
Firm technicals also provided solid support to gold prices, although the market lacked incentives of its own for traders to take new positions actively.
''There is some resistance around $590, but basic sentiment for gold is still bullish,. The market is very keen to challenge $600,'' said Shuji Sugata, assistant manager at Mitsubishi Corporation Futures and Securities Ltd.
At 0331 GMT, spot gold was trading at $585.00/585.90 an ounce, slightly down from $585.90/586.80 in late New York. It had climbed to a 25-year high of $591.50 on Monday.
The technical trend was bullish with the spot price about 3 percent above its 14-day moving average (MA) of $568 and nearly 5 percent above its 50-day MA of $559.
Crude oil prices were above $66, which provided a footing for gold and other precious metals.
High crude oil prices fan inflationary fears, and are often a factor that drives investors to seek gold as a hedge.
Geopolitical concerns, such as worries about Iran's nuclear programme, have also driven investors to seek gold, a traditional safe-haven investment.
Tokyo gold futures edged down, which indirectly weighed on spot gold.
The benchmark most-distant February contract on the Tokyo Commodity Exchange <0#JAU:> closed the morning session at 2,228 yen per gram, down 16 yen or 0.7 percent from Tuesday's close.
Japanese investors have been steadily slashing positions in yen-based gold in the recent weeks.
''It's possible that retail investors are now more interested in taking new positions in booming Japanese shares,'' Mitsubishi's Sugata said.
On Wednesday, Japan's TOPIX index climbed to its highest level in nearly 15 years on Wednesday, rising 0.72 percent as shares in Canon Inc. <7751.T> and other leading firms hit lifetime highs on expectations of better earnings.
Silver's recent stellar performance on hopes for the launch of a silver exchange-traded fund (ETF) has also inspired gold to climb.
Silver has risen since the U.S. Securities and Exchange Commission cleared the way for final approval of the ETF, the first to be backed by bullion.
ETFs are designed to track a specific market or commodity and trade like listed shares on an exchange.
Silver retreated slightly but held near a 22-year high. It was trading at $11.63/11.66 an ounce, little changed from $11.66/11.69 late in New York.
Elsewhere in the spot precious metals market, platinum edged down to $1,075/1,085 per ounce compared with $1,078/1,082 in New York on Tuesday.
Palladium edged down to $333.50/338.50 an ounce, compared with $339/343.
REUTERS SI SP1032