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gold higher at close, silver firm

LONDON: Europe's gold market spurted higher in late trade on Tuesday to reverse an earlier fall following the Bank of England's disappointing auction of 25 tonnes of its reserves.

Dealers said other precious metals markets suffered a lack of interest as all eyes were fixed on the reaction to the gold sale.

Gold managed to hold above the key $285.00 level after U.S. markets opened and this sparked some short-covering and lifted the price, touching levels above $290.00 a troy ounce.

"The auction disappointed the market and immediately prices fell back, but we stayed around $285.00 which was crucial," said one London-based trader.

"It's time for gold to go up now -- there are lots of people who are long of gold and not going to sell," said another. "So the price will have to go up to entice more sellers so it could move up to $295 over the next week or so."

Dealers said the auction -- just three times oversubscribed -- had failed to attract the anticipated high levels of interest. They were looking for an allotment price above the morning fix of $286.15, but it was set at $285.25 a troy ounce.

Spot gold was last quoted at $289.70/$290.50 a troy ounce from the New York close at $285.50/$286.00 and $284.75/$285.25 immediately after the result of the Bank of England auction.

SILVER FIRM

Dealers said despite a small uptick in silver prices, volumes were still low, leaving the market in the doldrums.

"Silver has been very disappointing in terms of activity," said one dealer.

"The next move will be for it to break below the $5.00 level, which will probably happen sometime soon," he added.

Spot silver was last indicated at $5.12/$5.14 from a late New York level of $5.03/$5.05.

Platinum and palladium markets saw poor interest with the market waiting for any news from major producer Russia on deliveries of metal.

"There's nothing much going on and that won't change until Russia says something," one trader said.

Palladium slipped back to trade at $665.00/$695.00 from a close of $682.00/$712.00 while platinum was at $491.00/$499.00 from $490.50/$500.50.-Reuters