Tokyo gold down, cash gold nervous before Fed

TOKYO, May 9 (Reuters) Tokyo gold futures edged down on Wednesday as investors adjusted positions following sharp gains over the past week, while cash gold rose but moved in a tight range due to nervousness ahead of a Federal Reserve meeting.

Traders in Tokyo Commodity Exchange platinum futures and cash platinum were also looking to policy meetings this week of the Fed and European Central Bank (ECB), which should provide direction for the dollar and precious metals.

''The trend for gold will depend on how the dollar moves against the euro, but long-term sentiment for the dollar looks bearish, so gold is more likely to be supported,'' said Hisaaki Tasaka, a market analyst at Ace Koeki Co. Ltd. in Tokyo.

''We need to see whether this trend will continue after the FOMC or ECB meetings, but for the time being profit-taking is dominant.'' Spot gold edged up to $685.60/686.80 an ounce as of 0639 GMT, from $684.30/685.80 in New York on Tuesday, when it dropped more than $4 because of a stronger dollar.

The benchmark TOCOM gold contract for April 2008 delivery ended at 2,670 yen a gram, down 6 yen or 0.2 percent from Tuesday's close.

The dollar drifted sideways against major currencies on Wednesday as market players looked to see whether the Fed would signal concern about weaker U.S. growth that could be a precursor to an interest rate cut.

The Fed is widely expected to keep rates on hold at 5.25 percent, and many analysts believe the central bank will emphasise in its post-meeting statement that worries about inflation pressures outweigh the economy's housing-led slowdown.

The euro was little changed around $1.3544 , holding off the record high of $1.3683 hit in late April.

A lower dollar makes dollar-based assets such as gold cheaper for investors holding other currencies.

TOCOM platinum futures advanced but were held back by profit-taking after the key April contract reached a record high of 5,017 yen a gram the previous day.

The platinum contract closed at 5,010 yen a gram, up 22 yen or 0.4 percent from Tuesday's close of 4,988 yen.

Cash platinum fell to $1,330/1,335 an ounce from $1,333/1,338 late in New York on Tuesday, when it jumped to its highest since late November at $1,340.

Concern over supplies eased on news that striking workers at South Africa's Northam Platinum Ltd. were due to return to work by Tuesday night after a court ordered the miners to end their work stoppage, which has hit output.

Still, platinum was expected to be supported by views that the launch of exchange-traded funds (ETFs) would draw steady demand for the white metal.

London-based ETF Securities Ltd. said on Friday its platinum ETF , launched on April 24, had attracted 8,307 ounces of platinum worth $10.9 million.

Switzerland's Zurich Cantonal Bank is scheduled to launch ETFs in platinum, palladium and silver by May 10.

''The strike at Northam is settled, but the market is worried about possible outbreaks of strikes at other mines in South Africa,'' Tasaka said.

Palladium rose to $371/375 an ounce from $370/374 in New York on Tuesday.

Silver fell to $13.46/13.51 an ounce versus $13.48/13.51.

Precious metals prices at 0639 GMT Last Net Change Pct Move Turnover (lots) TOCOM Gold 2670.00 -6.00 -0.22 67199 TOCOM Platinum 5010.00 22.00 +0.44 32221 TOCOM Silver 521.40 -2.10 -0.40 1443 TOCOM Palladium 1460.00 -2.10 -0.95 735 Spot Gold 685.60 Spot Platinum 1330.00 Spot Silver 13.46 Spot Palladium 371.00 Change so far in 2007 Metal Latest bid End prev year Pct Move TOCOM Gold 2670.00 2445.00 +9.20 TOCOM Platinum 5010.00 4254.00 +17.77 TOCOM Silver 521.40 493.30 +5.70 TOCOM Palladium 1460.00 1255.00 +16.33 Spot Gold 685.60 636.10 +7.78 Spot Platinum 1330.00 1132.00 +17.49 Spot Silver 13.46 12.85 +4.75 Spot Palladium 371.00 332.00 +11.75 Euro/Dollar $1.3544 Dollar/Yen 119.82 TOCOM prices in yen per gram, spot prices in $ per ounce.

REUTERS SR RS1250