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Gold shows firmer

NEW YORK: COMEX gold was firmer at midday, although the market turned quiet after an early rally led by silver was capped by trade selling at nearby resistance levels, traders said.

Analysts said the precious metals may be drawing support from expectations the Bundesbank will lower interest rates at its meeting this Thursday. Such expectations were also termed a factor behind a dollar rally this morning against the mark.

At 1215 EDT, December gold was up $0.60 at $389.90 an ounce, traded between $390.30 and $389.20. October was up $0.80 at $387.20.

Dealers quoted bullion at $384.10/$384.60.

Traders said that one focus for the precious metals this week will be the COMEX September options expiry after Friday's close, with players eyeing the $390 strike price.

Prices for the expiry will be based on the October contract, as there is no actively traded September futures contract.

SILVER

COMEX silver remained firmer at midday in quiet trade, after a modest midmorning rally to 2-1/2 week highs on fund buying, floor sources said.

They added that the fund activity was sparked by a move through nearby resistance at $5.23 an ounce in the September contract.

Analysts said expectations of a possible interest rate cut at this Thursday's Bundesbank meeting provided support for the precious metals on the fundamental side.

Some traders were wary of silver's rally, however, noting that gold and platinum responded with only slight gains.

At 1225 EDT, September silver was up 5.8 cents at $5.225 an ounce, retraced from its earlier high of $5.265. December was up 5.6 cents at $5.30.

Several traders felt the market may make another stab at the upside near the end of the session, although a failure to break to new highs could prompt long liquidation.-

-Reuter