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Gold dips in Europe silver faces pressure

LONDON: Precious metals slipped further in choppy afternoon trade on Wednesday as silver came under renewed pressure following a sharp rise in Comex stocks, dealers said.

Gold dropped to fix at $381.65 an ounce, down on an earlier $381.90 setting as the market followed silver's lead.

Comex weakened soon after the opening but gold found good buying on the lows just above $380 and the market then bounced.

"Gold is just about hanging in there. People have seen these sort of levels before and they're not quite ready to start going short," one dealer said. But a break below $380 would change all that and we could then see the funds coming in short."

Dealers said the market had seen an increase in producer activity recently as miners seemed to have given up hope of seeing substantially higher prices near-term.

"Emphasis has shifted to the sell side," one dealer said. "A lot of the market's recent strength has been down to silver."

And silver led the way lower this afternoon as Comex reacted bearishly to a reported 11-million rise in warehouse stocks there, possibly signalling an end to the recent squeeze on physical metal, dealers said.

It fixed earlier at a weaker 545.50 cents an ounce and came under fresh pressure once U.S. trading got underway.

But 540 support held up well and prices then edged back higher to trade at 543/545 cents by mid-afternoon.

"Given silver's volatile potential, it's held up quite well. But the stock rise has dealt a blow to the market," one said.

Platinum also steadied after sliding sharply overnight. It fixed at $426.85 this afternoon, down on an earlier $428.75 setting as it tracked silver lower. By mid-afternoon it was back at $427/$428 and talk of a possible strike at South African producer Impala was having little price impact, dealers said.

Palladium was also easier and quoted around $145.-Reuter