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Gold prices fall sharply

LONDON: Gold prices fell rapidly after the Comex opening this afternoon but found some support around $381.50 per ounce, dealers said.

Silver also lost ground in response, but the weakness there was tempered by the market's remaining nearby tightness.

Gold was fixed at $382.00 compared with $384.10 this morning and $386.35 on Monday, its highest since July 25.

Comex December was off its low, hit early on what dealers here saw as fund and local selling, at $387.60, down $3.30.

"Gold has tested the $381.50-$382 level which has held and it could start to move up again," a dealer said.

Some dealers said they did not see gold falling further as the yellow metal was attracting physical support at the lower levels.

However they also noted continued strength of the dollar -- above 97 to the yen and over 1.47 marks -- was beginnning to impact the bullion price.

"London was short Tuesday in anticipation of the price coming off because of the dollar. Then New York went for the stops, and the shorts had to cover," one dealer said, adding that Wednesday,s weakness in New York had been largely anticiapted.

Fund and trade selling was cited as being behind Wednesday,s early weakness on the exchange.

Silver's attempts to start a rally on Wednesday,s influenced today's fairly lustreless market which was holding on to the $5.30 level after coming under pressure from gold.

"It looked as though silver started the fall but gold took over very quickly," a dealer said.

Silver weakened to around $5.28 bid at the bottom but had edged about four cents higher after the gold fixing.

Dealers said the recent tightness in the market was a little easier and the Exchange For Physical (EFP) was also easier.

Platinum received some support from dealers buying early but there was little follow-through.

"They might have been going for the stops, but to do that, they would have had to take it much higher than they did," one dealer said.

Platinum was quiet at $420/$421, down about $1.50, at 1430 GMT and off a $417.75 low, having been around unchanged earlier.

Palladium was also little changed having spent most of the day close to its $148/$149 opening level.-Reuter