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Gold modestly weaker

NEW YORK: COMEX gold was modestly weaker at midday but holding to a narrow range, as activity in the precious metal markets focused on silver, traders said.

They attributed the volatile swings in silver, which fell to a one-week low at mid-morning on heavy long liquidation but quickly bounced back to its prior levels, to nervousness amid continued signs of nearby supply tightness.

At 1257 EDT, December gold was off $0.60 at $389.40 an ounce, traded between $389.80 and $388.80. A high of $390.20 was hit on ACCESS overnight. October was off $0.80 at $386.30.

Dealers quoted bullion at $383.80/$384.30.

One floor source noted buying from Swiss sources helping to buoy December gold after it dipped below $390 in sympathy with silver's losses.

Earlier in the session, the market showed little reaction to a firming of the dollar and U.S. economic data that was in line with or weaker than analysts' expectations.

Silver

NEW YORK: COMEX silver was modestly weaker at midday, staging a rapid recovery from sharp mid-morning losses in choppy, nervous trade amid nearby tightness in spot supplies and lease rates, traders said.

The COMEX options expiry after the close was seen adding to the volatility.

Cash sources attributed the brief losses to a shake-out after players got overly long amid expectations the tightness would buoy prices.

A tumble through commission house sell stops added to the losses on COMEX, although the active September contract quickly clawed its way back toward $5.25 an ounce, a key strike price going into today's options expiry.

At 1240 EDT, September was off 5.5 cents at $5.22 an ounce, recovered from a one-week low of $5.12. The high of $5.295 was hit early in the session.-Reuter