Gold futures dip to extend losses

http://www.marketwatch.com/column/metals%20stocks

Nov. 16, 2012, 12:33 a.m. EST

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By Sarah Turner, MarketWatch

SYDNEY (MarketWatch) — Gold futures dipped in Asian trading hours Friday, extending losses from the New York session as worries about demand trends played out in metal markets.

Gold for December delivery GCZ2 -0.02%  declined 80 cents to $1,713.00 an ounce in electronic trading on the Comex division of the New York Mercantile Exchange.

The moves added to a drop of $16.30, or 0.9%, to $1,713.80 an ounce in regular Nymex trading Thursday after a report from the World Gold Council indicated that demand for the metal weakened in the third quarter. Read: Gold futures drop nearly $20 an ounce

HSBC metal strategists said that gold didn’t respond to central-bank cues on Thursday, failing to rally on rising expectations for more monetary easing in Japan, which they said left short-term investors “disappointed.”

Still, they are hopeful that demand will pick up shortly. “We anticipate demand to remain resilient in the fourth quarter, in part due to the emerging markets, most notably in India and China,” the HSBC strategists said.

On Friday, currency-market moves provided a headwind for the precious metal, as the ICE dollar index DXY +0.05%  edged up to 81.045, from 81.039 in late North American trading on Thursday.

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Asia driving gold demand

The global gold demand reflected challenging global economic climate with India market up and China demand down.

A stronger dollar tends to discourage buying as it makes dollar-denominated commodities more expensive to holders of other currencies.

Around the wider metals complex, silver for December delivery SIZ2 -0.52%  lost 23 cents to $32.45 an ounce, while copper for delivery in December HGZ2 +0.03%  traded flat at $3.47 per pound.

December palladium PAZ2 -0.42% fell $6.20 to $625.00 an ounce, while January platinum PLF3 -0.74%  dropped $14.30 to $1,559.00 an ounce.

Platinum prices fell on Thursday after Anglo American Platinum Ltd., the world’s largest platinum producer, said striking employees in South Africa had returned to work.

The HSBC strategists said that they also expect platinum prices to find support in the medium term, however.

“Issues with mining profitability, such as lower platinum-group metal prices and higher labor costs, have led to producers contemplating closing uneconomical mines,” they said.

Sarah Turner is MarketWatch's bureau chief in Sydney.