Gold firms, Tokyo recoups losses on oil

TOKYO, May 23 (Reuters) Gold firmed on Wednesday as crude oil prices rose, helping the Tokyo futures market recoup early losses in light trading.

Spot gold inched up to $660.00/$661.50 an ounce at 0648 GMT, up from $658.80/$659.30 last quoted in New York.

''I think the market is best described as trying to test the bottom, rather than being in an actual downtrend,'' said Akira Doi, director at Daiichi Commodities Co. Ltd.

He said the market, lacking fresh news to provide direction, was stuck between trying to test a bottom of $655 and resistance at $665.

Gold on the Tokyo Commodity Exchange was looking to the dollar-based gold market for direction.

Oil prices rose on Wednesday as some traders bet that U.S.

gasoline supplies would fall ahead of peak driving season, and as the market awaited an international body's report on Iran's nuclear programme.

Benchmark London Brent rose 41 cents to $69.93 a barrel.

Higher oil prices can encourage buying of gold as a hedge against inflation driven by energy costs.

The benchmark most-distant April TOCOM gold contract closed flat at 2,611 yen per gram, recovering from the day's trough of 2,599 yen. The day's peak was 2,614 yen.

TOCOM gold has been wavering either side of 2,600 yen for about a week.

U.S. gold futures finished lower on Tuesday, hit by a higher dollar, weaker crude oil prices and chart-based sales.

The most-active gold contract for June delivery on the New York Mercantile Exchange settled down $3.90 at $659.90.

In the currency market, the dollar hit a three-month peak against the yen and hovered around a six-week high against the euro on Wednesday on waning expectations that the Federal Reserve will cut interest rates later this year.

The dollar rose above 121.75 yen against the Japanese currency during Asian business hours.

It was at 121.55/121.58 yen in late New York trade.

Elsewhere on TOCOM, the benchmark platinum contract touched a three-week low of 4,906 yen, down about 2.6 percent from the all-time high of 5,039 yen marked on Monday.

It later bounced back strongly, however, with the key April platinum futures contract recovering to finish up 43 yen per gram at 4,995 yen.

Market observers say that TOCOM platinum will probably not be able to sustain a level above 5,000 yen, however.

Spot platinum was at $1,296/$1,301, up from New York levels of $1,285/$1,290 an ounce.

April TOCOM silver finished down 1.3 yen per 10 grams at 507.8 yen.

Spot silver was at $12.94/$12.97, edging up from $12.92/$12/96 an ounce.

Traders were waiting for the release of metals consultant GFMS Ltd.'s release of the World Silver Survey 2007 later on Wednesday.

April TOCOM palladium was at 1,488 yen per gram, up 15 yen.

Spot palladium was at $372/$377 an ounce, from $374/$378 in New York.

Precious metals prices at 0739 GMT Last Net Change Pct Move Turnover (lots) TOCOM Gold 2611.00 0.00 +0.00 36029 TOCOM Platinum 4995.00 43.00 +0.87 69015 TOCOM Silver 507.80 -1.30 -0.26 1220 TOCOM Palladium 1488.00 15.00 +1.02 1607 Spot Gold 660.25 Spot Platinum 1293.00 Spot Silver 12.97 Spot Palladium 374.00 Change so far in 2007 Metal Latest bid End prev year Pct Move TOCOM Gold 2611.00 2445.00 +6.79 TOCOM Platinum 4995.00 4254.00 +17.42 TOCOM Silver 507.80 493.30 +2.94 TOCOM Palladium 1488.00 1255.00 +18.57 Spot Gold 660.25 636.10 +3.80 Spot Platinum 1293.00 1132.00 +14.22 Spot Silver 12.97 12.85 +0.93 Spot Palladium 374.00 332.00 +12.65 Euro/Dollar $1.3443 Dollar/Yen 121.65 TOCOM prices in yen per gram, except for silver which is in yen per 10 grams, spot prices in $ per ounce.

REUTERS PV SSC1354