Gold weakens as market cautious before weekend

By Frank Tang and Atul Prakash

NEW YORK/LONDON (Reuters) - Gold drifted lower on Friday in a cautious trading tone in spite of a decline in the dollar, and analysts said the market was likely to continue moving in a range in the near term.

The catalyst could come from sharp changes in the currency and the energy markets or heavy buying from investment funds, betting on strong returns in the long term, they said.

Gold was at $924.60/925.40 an ounce by New York's last quote at 2:15 p.m. EDT, against $925.90/926.70 in New York late on Thursday and a record high of $1,030.80 on March 17.

Zachary Oxman, senior trader with Wisdom Financial in Newport Beach, California said that investors have been averse to taking additional risk under the current market conditions.

"There is a general tone of lower willingness to take risk at this point. I think you are probably seeing people being hesitant or not allowed to take as much risk as they normally would," Oxman said.

The yen rose broadly against the dollar after a fall in earnings of U.S. bellwether General Electric stoked fears about the economy, causing investors to dump risky trades.

A weaker dollar makes gold cheaper for holders of other currencies and often lifts bullion demand. The metal is also generally seen as a hedge against oil-led inflation.

U.S. crude ended up 3 cents at $110.14 a barrel, reversing initial losses, lifting gold from session lows.