By Myra P. Saefong, MarketWatch
TOKYO (MarketWatch) -- Gold futures dropped as much as $16 an ounce in electronic trading Friday in Asia, as traders took some time to rethink the spectacular gains in the precious metal that have lifted prices for the December contract by $43 since the start of the month.
But December gold was still trading higher for the week, well above last Friday's New York closing level of $1,174.20.
The contract fell to a low at $1,200.60 an ounce on Globex. It was down $14.10, or 1.2%, at $1,203.30 in afternoon trading in Tokyo.
"We do not see this as a start of a longer-term correction, but are rather using any weakness to accumulate the metal," said Martin Hennecke, associate director at Tyche Group Ltd. in Hong Kong.
"In historical terms, gold is not yet expensive in our view," he said, adding that the inflation-adjusted 1980s high was approximately $2,200.
"So the gold price would still have to rise further to even post a real new inflation-adjusted high, while the fundamentals nowadays are much more positive for gold then they were in 1980," he said.
Gold for December delivery closed with a gain of $5.40, or 0.4%, at $1,217.40 an ounce Thursday on the Comex division of the New York Mercantile Exchange, after tapping a fresh record high of $1,226.40 in electronic trade.
"Globally, gold production has been flat since the price bottomed in 2001, despite the increase in gold prices ... suggesting that miners are finding it hard to increase production/supply, otherwise they would likely have increased it substantially to cash in on higher prices," said Hennecke.
"We remain very positive on the outlook for gold," he said.
