Gold stays near 3-week high, TOCOM retreats

TOKYO, June 6 (Reuters) Spot gold on Wednesday remained near a three-week high marked the previous day, while Tokyo gold futures fell on profit taking after a three-percent gain in the past five days.

As of 0300 GMT, cash gold rose to $671.50/672.10 an ounce, from $669.20/670.70 in New York. On Tuesday, gold climbed as high as $673.95, the highest since May 14, helped by a fall in the dollar.

''The trend of gold is basically favourable as a downside test has failed, and $650 for the spot price has been firmly supported,'' said Satoshi Matsunaga, analyst at Mitsui Bussan Futures Ltd.

But in the short term, the currency market, a key trading factor, fails to inspire investor buying, he said.

Players in the currency market awaited clues on how much higher the European Central Bank could lift interest rates after an expected increase later in the day.

On Tuesday the dollar touched a three-week low against the euro after comments from Federal Reserve Chairman Ben Bernanke that the U.S. housing market will continue to be a drag on growth.

The euro was little changed at $1.3525 on Wednesday, off a high of $1.3555 struck the previous session.

Against the yen, the dollar stood at 121.26 yen , having retreated from a high above 122 yen hit earlier this month.

The TOCOM benchmark gold futures contract for April 2008 delivery fell 16 yen a gram, or 0.6 percent, to 2,648 yen by midday. On Tuesday it rose as high as 2,664 yen, the highest in nearly a month.

The benchmark April contract for platinum futures fell 11 yen a gram, or 0.2 percent to 4,994 yen.

Cash platinum firmed to $1,294/1,299 an ounce from $1,291/1,296 in New York.

Spot platinum hit a 2007 peak of $1,340 in early May on expectations for a U.S. listing of platinum-based exchange traded funds (ETFs), before Europe-based ETF Securities said that it has no plans to list its platinum ETF, the world's first, in the U.S. market.

Japan's top trading house, Mitsubishi Corp., said late on Tuesday spot platinum could hit a record high of $1,400 an ounce in the fourth quarter. [ID:nT159358] Tom Kendall, a precious metals strategist for the company based in London, said at a Tokyo seminar that investors would absorb via exchange traded funds (ETFs) an expected increase in supply from South Africa from the second half of 2007.

REUTERS HK KP1003