950817

Comex gold

settles lower

after early selloff

NEW YORK: Comex gold settled lower after

an early fund-led selloff, although physical demand lifted

prices from the lows, traders said on Wednesday.

The weakness was blamed on disappointed long liquidation

after Tuesday's precious metals rally, attributed to continued

signs of nearby tightness in silver, proved unsustainable.

Some traders said gold also may have shown a delayed

reaction to Tuesday's strong rally in the dollar.

December gold ended $3.00 lower at $387.90 an ounce,

traded between $389.50 and $386.00. Volume was estimated at

38,000 lots, down from Tuesday's heavy 46,036.

Dealers quoted bullion at $382.30/$382.80.

Gold's open interest fell 3,330 lots on Tuesday to

173,296, suggesting substantial fund short covering during

yesterday's rally.

Traders said they noted some fresh fund selling today, in

addition to long liquidation, when December broke below the

recent low of $387.30.

Traders said speculators were discouraged when yesterday's

rally failed, with producer selling helping to cap the upside.

The market was expected to hold to the ranges of recent

months, however, with support likely to emerge from physical

demand as the jewelry trade gears up for the year-end

gift-giving season.

SILVER

Comex silver settled modestly

firmer, managing to recover from early declines in sympathy

with a selloff in gold.

Bullion dealers said the silver market remains nervous

amid signs of nearby supply tightness, which have persisted

since early last week and helped lift prices to eight-week

highs on Tuesday.

Nearby lease rates rose late in today's session and prices

surged to fresh intraday highs, as renewed silver borrowing

lifted one-month metal one percentage point to 7.50/6.50. The

exchange for physical (EFP), or the premium of September

futures to spot, also dipped further into the minus column to

-3.5/-3.0 cents, off about 0.5 from Tuesday, dealers said.

Futures prices also surged briefly near the close,

although one trader attributed this to short covering after

the early selloff rather than the jump in lease rates.

September silver settled 2.5 cents higher at $5.37 an

ounce, traded between $5.41 and $5.24. Volume was estimated at

30,000 lots, including 3,131 switches, down from Tuesday's

very heavy official turnover of 42,135.

One cash trader said silver should find resistance at

$5.41, while $5.22/$5.21 was pegged as nearby support.

PLATINUM

NYMEX platinum settled firmer,

quickly shrugging off a fund-led selloff this morning in the

gold market.

Traders said platinum appears set to continue working its

way higher, managing to steady this week after persistent fund

selling in recent weeks had taken prices to 4-1/2 month lows

last Friday.

October platinum settled $2.20 higher at $421.30 an ounce,

traded between $422.50 and $418.20, a range set by

mid-morning. Volume was estimated at 3,521 lots, down slightly

from Tuesday's official 4,048.

September palladium went out $0.50 weaker at $149.10 an

ounce.-Reuter