By Arpan Mukherjee Of DOW JONES NEWSWIRES WELLINGTON (Dow Jones)--Gold prices fell sharply in the Asian session Monday as a rebounding dollar weighed on prices following Japan's yen-selling intervention in foreign exchange markets aimed at weakening the Japanese currency and helping the country's exports. At 0521 GMT, spot gold was at $1,712/oz, down $31.40 from its previous close, but off an intraday low of $1,707.10/oz, which was down 2%, paring gains totaling 6.2% last week on the back of dollar weakness. The dollar, which also strengthened against the euro, was above JPY79 compared with JPY75.812 late Friday. The euro was trading around $1.40 compared with $1.4147 late Friday in New York. Dollar-denominated commodities such as gold tend to weaken when the dollar strengthens, as this makes them more expensive for holders of other currencies. "The price decline appears temporary; it could easily move up," said a Tokyo-based trader, adding that there is strong physical and investment demand for the metal at current prices. Chintan Karnani, director at Insignia Consultants, said that while the yen intervention could weigh on commodity prices, over the past decade such exercises had "failed to have any sustainable impact on yen and commodity markets and this one may not last for a long time." Sustained safe-haven interest is providing some support for gold, as investors anticipate near-term volatility due to continuing concerns over slow U.S. economic growth and questions regarding euro-zone bailout plans, UOB KayHian senior analyst Helen Lau said, tipping near-term support for gold at $1,700/oz. Spot silver was at $34.27/oz, down $1.02 from its previous close, while spot platinum was at $1,596/oz, up $51, and palladium was at $647/oz, down $18. Standard Bank analyst Walter de Wet said that for platinum, net speculative length as a percentage of open interest is currently at 48.7%, which is well below last year's average of 58.6%. In palladium, the reading is 34.9%, well below the 60% average during the past two years. "As a result, after a sharp decline in PGM prices, we are now starting to look for opportunities to establish possible long positions," de Wet said. -By Arpan Mukherjee, Dow Jones Newswires; 64-4-471-5990; arpan.mukherjee@dowjones.com

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