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Gold firmer silver

stronger in NY

NEW YORK: COMEX gold settled slightly firmer in very thin trade, buoyed by a rally in silver prices, traders said on Monday.

Silver continued to occupy the spotlight in the precious metal markets amid signs of nearby supply tightness that have continued since last Monday.

December gold settled $0.60 firmer at $389.90 an ounce, traded between $390.20 and $388.80. Volume was very light at an estimated 9,000 lots versus Friday's official 14,129. Dealers quoted bullion at $384.20/$384.70.

Traders remained wary of the silver tightness, however, which many suspected was due to manoeuvering by speculators.

Traders downplayed the role of fundamental factors, including a modest rally in the KR-CRB index of commodity futures, in today's market activity.

U.S. July industrial production and capacity utilization data are due for release Tuesday at 0915 EDT, with analysts' average forecast indicating a 0.2 percent drop in production, versus the prior month's 0.1 percent gain, and a capacity use rate of 83.1 percent versus June's 83.5.

SILVER

Comex silver settled sharply higher after rallying periodically during the session on broad-based buying, including fund buying, traders said, as the market warily eyed signs of nearby supply tightness.

Bullion dealers said that short-term lease rates and the exchange-for-physical (EFP, or, the price of spot metal versus September futures) both eased slightly, however.

Dealers remained at a loss to explain the tightness, which has persisted since last Monday, although they generally expected it would be short-lived and doubted it had much basis in actual industrial demand for the metal.

Two popular scenarios attributed the tightness to a speculative squeeze play or to one or more investors who had to borrow to liquidate a long position in the cash market.

September settled 13.7 cents higher at $5.352 an ounce, traded between $5.41, its highest level in nearly four weeks, and $5.205. Volume was moderate to heavy at an estimated 28,000 lots, little changed from Friday's official 29,937.

Traders downplayed the role of fundamental factors in today's trade, including a modest rally in soy prices and the KR-CRB index of commodity futures.

PLATINUM

NYMEX platinum settled barely weaker, unable to maintian modest gains scored in sympathy with a silver rally.

The platinum group metals have been under persistent pressure in recent weeks from fund selling after reports of higher-than-expected Russian sales in the first half of 1995.

But cash traders saw no noticeable pick-up in Russian PGM sales in recent days, however, attributing the price declines largely to technically driven fund selling.

"The Russians have been selling palladium since it was at $178 (an ounce)" in early April, said one trader. "I don't think anything is that different."

One trader blamed the generally low volumes and weak tone of recend sessions on the absence of Japanese traders, due to that country's mid-August Bon holidays.

October platinum settled $0.60 lower at $415.40 an ounce, traded between $417.40 and $414.50. Volume was moderate at an estimated 1,649 lots, down from Friday's heavy 3,200.

September palladium went out $0.85 higher at $148.95 an ounce, traded between $149.00 and $147.00, matching Friday's life-of-contract low.-Reuter