By Virginia Harrison, MarketWatch
SYDNEY(MarketWatch) — Gold futures inched higher in electronic trading Friday, with investors dipping a toe back into the asset class following several sessions of losses.
Gold for August delivery GC1Q +0.16% added $3.50, or 0.2%, to $1,590.50 an ounce on the Comex division of the New York Mercantile Exchange during Asian trading hours.
Friday’s advance came after a three-day losing streak for the metal which recently came under pressure amid a weaker dollar and as encouraging signals on resolving sovereign debt issues reduced the metal’s safe-haven appeal.
On Thursday European leaders agreed to a second bailout for Greece and put in place arrangements designed to prevent the spread of debt problems through the region. Read more on European debt developments.
Against this backdrop, gold’s move higher could be temporary, one strategist said.
“Financial markets were uplifted with contagion fears receding to the background, and the performance of safe-haven assets such as gold are likely to be impacted,” Ong Yi Ling, investment analyst at Phillip Futures in Singapore said.
In addition, gold prices are trading at elevated levels and the metal reached a nominal record of $1,602.40 an ounce on Monday. Adjusted for inflation, gold would have to settle close to $2,400 an ounce to supersede a record around $850 an ounce reached in January 1980.
Ong said the resistance level for gold prices remains around $1,600.00 an ounce, adding “short-term there is some downside risk for gold.”
Progress in efforts to raise the U.S. debt-ceiling “could provide another reason for investors to close off some bullish bets in gold,” according to Ong.
“[If] the debt-ceiling is raised it reduces some uncertainty in financial markets, and safe-haven flows could be reduced, providing a reason for some profit-taking in gold,” she said. Read more on U.S. debt ceiling talks
The broader metals complex diverged Friday, with September silver SI1U +0.50% up 31 cents, or 0.8%, to $39.26 an ounce and copper for September delivery HG1U +0.29% rose one penny, or 0.3%, to $4.40 a pound.
October platinum PL1V -0.05% traded flat at $1,787.50 an ounce, while palladium for September delivery PA1U -0.48% lost $3.95, or 0.5%, to $805.05 an ounce.
Virginia Harrison is a MarketWatch reporter based in Sydney.
