A node performing analog network coding simply forwards a signal it receives over a wireless channel. This allows for a (noisy) linear combination of signals simultaneously sent from multiple sources to be forwarded in the network. As such, analog network coding extends the idea of network coding to wireless networks. However, the analog network coding performance is limited by propagated noise, and we expect this strategy to perform well only in high SNR. In this paper, we formalize this intuition and determine high-SNR conditions under which analog network coding approaches capacity in a layered relay network. By relating the received SNR at the nodes with the propagated noise, we determine the rate achievable with analog network coding. In particular, when all the received powers are lower bounded by 1/δ, the propagated noise power in a network with L layers is of the order Lδ. The result demonstrates thatthe analog network coding approaches the cut-set bound as the received powers at relays increase. As all powers in the network increase, the analog network coding rate is within a constant gap from the upper bound. The gap depends on number of nodes. We further demonstrate by an example that analog network coding can perform close to sum-capacity also in the multicast case.