--S&P cuts outlook on Greece to negative from stable
--Euro weakens, pressuring gold futures
By Tatyana Shumsky
NEW YORK--Gold futures edged higher on low trading volumes, though traders were cautious amid renewed concerns about Greece.
The most actively traded contract, for December delivery, was recently up $3.60, or 0.2%, at $1,616.40 a troy ounce on the Comex division of the New York Mercantile Exchange.
Gold's gains were likely augmented by thin trading volumes, market participants said. Individual trades tend to have an outsized impact on price discovery when trading volume is low.
Greece recaptured market attention after credit ratings company Standard & Poor's lowered its outlook on the country to negative from stable. S&P said it will be difficult for the government to meet the conditions required to attain the next segment of bailout funds. The ratings company also affirmed its sovereign-credit rating at triple-C, or eight notches into junk territory.
"You still don't have the safe haven money going into it. In commodities people are still risk averse right now," said Bob Haberkorn, senior commodity broker with RJO Futures. "Until we can confirm a close above $1,625 I don't want to be a buy and hold guy," he said.
Gold prices have struggled to find their footing amid worries about the euro-zone sovereign debt crisis. While investors saw gold as a haven from these problems in the first year of Europe's debt crisis, concerns about liquidity and the future of the euro saw gold rebranded as a risk asset and sold off alongside equities and commodities last September. Since, then gold has marched in step with these riskier assets each time euro-zone fears re-emerged.
S&P's move was "not exactly earth shattering but enough to put the brakes on the recent USD selloff and send stocks slightly lower," traders at TD securities said in a note.
The dollar climbed against the euro, pressuring the single European currency to $1.2344 from $1.2402 earlier.
A stronger dollar tends to pressure gold futures lower. Gold is traded in dollars and becomes more expensive for investors who use other currencies when the dollar rallies.
-Write to Tatyana Shumsky at tatyana.shumsky@dowjones.com
