Dan,some Japanese may die from gold fever.
According to Business Day, analysts say gold buying in Japan has slowed, thus causing the pullback.
“Gold has fallen largely on selling from TOCOM traders with prices on TOCOM trading limit down again,” wrote TheBullionDesk.com analyst James Moore.
"The real test will be to see if New York Commodity Exchange (Comex) funds decide to sell again with a break below $500/oz potentially targeting the $485/oz area," Moore added.
"We have argued that the move in gold between $500/oz to $540/oz was largely due to buying on TOCOM; this appears to have been confirmed by the behaviour of gold this week.
"The sharp move lower in USDJPY together with a weak USD price of gold has prompted TOCOM longs to try and exit the market," London-based UBS analyst John Reade wrote.
"But due to the tight limit that TOCOM futures contracts have to trade within most of the recently added longs are trapped; with very little of the recent increase in TOCOM open interest reversed despite the sharp move lower in price," Reade added.
"Gold and, to a lesser extent, other precious metals, are in the hands of the Japanese general public at the moment. The general public are long about five million ounces, we estimate, and we believe they will want to exit these positions as soon as they are able," Reade wrote.
"We suspect that our one-month forecast of $500/oz will prove a little optimistic and that gold can dip to $480/oz to $490/oz within the next few days," he added.
Scotiabank warns of the impact on the market when Japanese traders pull out, according to Canada NewsWire
