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Gold firm,silver,

platinum surge

NEW YORK: Comex gold settled with pared gains, lagging rallies in the silver and platinum markets fueled by signs of nearby supply tightness, traders said.

They noted that expectations of producer selling in gold, as seen during a rally Tuesday to three-week highs, weighed on sentiment.

December gold settled $1.10 higher at $389.00 an ounce, traded between $391.00 and $388.40. A low of $387.50 was seen on ACCESS trade overnight. Volume was heavy at an estimated 40,000 lots, although this was down from Wednesday's 50,100.

Dealers quoted bullion at $383.50/$384.00.

The gold-silver ratio, basis the December contracts, has plummeted in the past two days, settling today at 68.91 versus Tuesday's 72.255.

The tightness in silver put fundamental factors, including the recent strength in the dollar and this morning's release of a higher-than-expected U.S. June trade deficit, far in the background, traders said.

SILVER

Comex silver settled sharply higher after an early rally to three-month highs amid continued signs of nearby supply tightness, traders said.

The market managed to maintain most of its gains throughout the session, amid speculation that one or more players may be trying to squeeze the spot market.

Traders said the rally started late Wednesday and was continued in Europe overnight, where strong buying of over-the-counter call options was noted. Funds then poured into the market shortly after today's Comex opening.

September silver settled 21.0 cents higher at $5.58 an ounce, traded between $5.62, the highest level for a most-active contract since May 25, and $5.44. A low of $5.35 was hit on ACCESS overnight. Volume was heavy at an estimated 42,000 lots, with 4,864 switches, versus Wednesday's 26,500.

Although short-term lease rates eased somewhat today as the higher prices lured more metal into the market, traders and analysts said it would take several days of easing to confirm that the tightness was coming to an end.

One trader said growing attention to the tightness by the media and investors could keep the rally going, perhaps to $6.00, although he expected the tightness in spot supplies to ease at the recent higher prices.

Traders also noted an expiry of a relatively large volume of odd-dated OTC options was due Friday at 0930 EDT, with strikes concentrated at $5.40, $5.50 and $5.70. Standard OTC options expire on the third-to-last business day of each month.

PLATINUM

NYMEX platinum settled sharply higher, after an early rally fueled by heavy fund short covering, traders said.

They noted that the market had seen good speculative interest in the gold-platinum spread helping to buoy the market in recent days, while buying overnight in Tokyo helped set the stage for today's speculative short-covering rally.

Funds had gone heavily short of platinum in recent weeks, traders said, driving the October contract to a 4-1/2 month low of $414 an ounce late last week.

One trader said the market's ability to steady after the selloff, as well as recent rallies in silver amid continuing signs of nearby supply tightness, presaged today's rally.

"Generally the market has been very short and it doesn't make any sense to be short anymore," he said.

October platinum settled $7.10 higher at $428.40 an ounce, traded between $434.00, a four-week high, and $427.00. A low of $422 was hit on ACCESS overnight. Volume was very heavy at an estimated 10,073 lots, versus Wednesday's official 3,518.

September palladium ended up $2.75 at $151.85 an ounce.-Reuter