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Gold, silver settle

flat in dull trade

NEW YORK: Comex gold settled flat after a day of dull trade on Wednesday, showing virtually no reaction to a strong rally in the dollar. In recent months gold has tended to travel in the opposition direction of major moves in the dollar.

Traders attributed gold's disinterest in the currency markets to good physical demand at lower price levels reached during gold's declines of the past week.

December gold settled unchanged at $388.90 an ounce, traded narrowly between $389.20 and $388.10, a range set early. Nearby August ended unchanged at $388.90. Volume was early. Nearby August ended unchanged at $382.90. Volume was light at an estimated 16,000 lots versus Tuesday's 32,258.

Dealers quoted bullion at $382.90/$383.40.

Traders offered a number of explanations for gold's decoupling today from the dollar, which rallied to a 4-1/2 month high against the yen after aggressive intervention by the Bank of Japan and the Federal Reserve.

"Gold is running its own race to a large extent," said one bullion dealer.

"Those that want to be short are already short," he added, noting that gold may see a short-covering rally by week's end. "It hasn't broken through the level they (the shorts) wanted it to break through. They're frustrated."

Bullion traders also noted a recent pickup in demand from the US jewellery trade as it begins preparing for the Christmas holiday season, with one West Coast refinery reported to have raised its price from flat with London gold two weeks ago to a 15 cent premium at present.

Traders also noted worries about Japan's banking crisis lending support to gold, while interest rates were now seen as a greater focus than currencies for gold traders.

"Certainly right now they're more interested in interest rates," said Lehman Brothers analyst George Milling-Stanley.

SILVER

NEW YORK: Comex silver settled weaker after a day of dull trade, as the market continued trying to build a base after selloffs over the past week.

The precious metals were little affected by a rally in the dollar to 4-1/2 month highs against the yen. Dollar strength has tended to be negative for the metals in recent months.

Most-active September silver settled 4.5 cents lower at $5.115 an ounce, traded between $5.165 and $5.11. Volume was moderate at an estimated 14,000 lots, versus Tuesday's official turnover of 18,233.

Traders said activity was largely limited to the trade and locals, adding that the market appeared to be trying to establish a floor above the $5.00 level. NYMEX platinum settles firmer

NYMEX platinum settled firmer in thin dealings, traders said.

Some noted light profit taking from the short side as the market appeared to have found a near-term floor after the dramatic selloffs of the past week.

The precious metals largely ignored a rally in the dollar today, as intervention by the Bank of Japan and the Federal Reserve lifted the U.S. currency to 4-1/2 month highs against the yen.

October platinum settled $1.10 higher at $421.90 an ounce, traded between $423.50 and $421.00.

September palladium went out $0.55 higher at $153.20 an ounce.-Reuter