By Chris Oliver, MarketWatch
HONG KONG (MarketWatch) – Gold futures edged slightly lower in electronic trading in Asia on Friday, with prices hovering near the $1,700 an ounce level amid a lack of cues to drive trading following the Thanksgiving holiday in the U.S.
Gold for December GC1Z -0.21% was down 50 cents, or 0.03%, at $1,695.40 per ounce on the New York Mercantile Exchange during midday trading hours in East Asia.
Analysts at Credit Agricole said bullion was likely to trade in a tight range owing to the holiday-thinned trading volume, though the outlook in the near term was for more volatility.
“Prices could still gap in either direction depending upon events in the euro zone and the fortunes of the U.S. dollar, which remains the safe-haven of choice amid a flight to safety, quality and liquidity,” said Credit Agricole analyst Robin Bhar in a note.
He said gold has been behaving more like a risk asset recently, failing to benefit from safe-haven fund flows as investors grow more nervous about the wider economic picture.
He cautioned bullion prices could potentially ease back to the $1,650 per ounce level, if global markets face a liquidity squeeze that prompts further liquidation and margin selling.
“Gold is under-performing as investors are more concerned about return of capital rather than the return on capital, a situation last seen during the great financial crisis of 2008-09,” Bhar said.
Chris Oliver is MarketWatch's Asia bureau chief, based in Hong Kong.
