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Comex gold settles

with pared gains

NEW YORK: Comex gold settled with pared gains, after an early fund-led rally in sympathy with silver was capped by producer selling, traders said on Tuesday.

They noted several funds that had gone short during selloffs last month covered their positions after the December contract broke above last week's high of $391.30 an ounce.

December gold settled $1.00 higher at $390.90 an ounce, traded from $393.50 to $390.00, a range set by midday. A low of $389.80 was hit on ACCESS overnight. Volume was moderate to heavy at an estimated 33,000 lots, versus Monday's 13,670.

Dealers quoted bullion at $385.20/$385.70.

The market was undeterred by a rally in the dollar on concerted intervention in the foreign exchange market this morning by the Bundesbank, the Federal Reserve and the Bank of Japan, although some analysts argued that the renewed volatility in currencies was supportive for precious metals.

Several traders downplayed the dollar as a factor in today's trade, however. The market also largely ignored U.S. industrial production and capacity use data that was not as weak as analysts had expected.

Today's rally freed December gold from a narrow four dollar range that had confined trade for nearly two weeks.

Cash dealers noted producer selling above $386 in the spot market helping to put a lid on prices, however.

SILVER

NEW YORK: Comex silver settled barely weaker, after an early fund-driven rally to two-month highs stalled and speculative selling helped drive prices back below unchanged, traders said.

This morning's rally came amid continued concerns about signs of nearby supply tightness and a sharp drop overnight in COMEX silver stocks to their lowest levels in over six years.

Traders noted a slight easing today, however, in both short-term lease rates and the exchange-for-physicals (EFP), which shed about one cent from Monday's close at 3.75 cents an ounce.

September silver settled 0.7 cent lower at $5.345 an ounce, traded between $5.49 and $5.28. December was off 0.3 at $5.41. Volume was estimated at 34,000 lots, including 6,047 switches, versus Monday's official 31,853.

Silver's rally also gave a lift to gold and platinum, while the precious metals largely ignored a rally in the dollar fueled in part by concerted central bank intervention.

Some analysts said renewed currency volatility was supportive for the precious metals, although traders downplayed the importance of the dollar in today's trade.

PLATINUM

NEW YORK: NYMEX platinum settled higher but off its early peaks, after an early precious metals rally led by silver ran out of steam.

Traders noted fund short covering lifting platinum, which has been battered repeatedly by fund selling in recent weeks and hit a 4-1/2 month low last Friday. Large fund short positions were thought remaining in the market despite today's short covering.

Several analysts cited concerns about substantial Russian platinum group metal sales as weighing on sentiment, although some expected that strong industrial demand would eventually spur a recovery in prices.

October platinum settled $3.70 higher at $419.10 an ounce, traded between $423.00 and $417.50, a range set early. Volume was moderate to heavy at an estimated 4,044 lots versus Monday's official 1,666.

September palladium ended $0.65 higher at $149.60 an ounce.-Reuter