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Gold barely weaker

NEW YORK: COMEX gold was barely weaker at midday, receiving only a light lift from its early lows as the KR-CRB index of commodity futures rallied strongly to new eight-year highs.

Traders said the active June futures were finding support at Tuesday's low of $396.20 an ounce, , however, indicating prices had steadied for the near term after Tuesday's losses.

At 1255 EDT, active June gold was off $0.10 at $397.00 an ounce, traded from $397.90 to $396.20.

Dealers quoted bullion at $394.30/$394.80.

"People feel that $396 should hold (the June futures) for a while," said Don Tierney, analyst at Pell Brothers Trading. He added that, although the KR-CRB's rally had given only a light boost to the gold market so far, continued strength in the index may eventually feed through to the precious metals.

One commission house analyst noted, however, that fund managers were wary of the gold market after being burned repeatedly during gold rallies this year, including a rally to six-year highs near $420 in early February and a rally early this week above $400, both of which proved unsustainable.

"Everybody's saying, 'we got burned twice'," he said, adding that the funds now appear to be focusing on other commodities such as grains and the petroleum sector.

Tuesday's open interest fell a modest 1,246 lots to 202,031. Some traders had been expecting a larger decline, as a player who bought heavily on Monday was thought to have liquidated those long positions yesterday.

One trader said the data suggested that a large number of fresh short positions were also taken during Tuesday's sell-off.

SILVER

COMEX silver was firmer at midday, receiving a lift from bargain hunting by commission houses after gold prices held at support levels during this morning's test of the downside, traders said.

The precious metal complex received only light support so far, however, from a strong rally in the KR-CRB index of commodity futures to fresh eight-year highs.

At 1305 EDT, May silver was up 4.3 cents at $5.51 an ounce, traded from $5.515 to $5.455.

One floor source noted that the May contract appeared to be finding consistent support in recent sessions in the low $5.40s, although it was struggling with resistance at $5.52/$5.51.

PLATINUM

NYMEX platinum was barely firmer and holding to a narrow range at midday, as the precious metals drifted quietly after volatile swings early in the week.

The markets rallied Monday, buoyed by surging petroleum and grain prices and a tumble in stocks and bonds, although they pulled back again Tuesday amid disappointment at a lack of follow-through buying.

Platinum lagged gold and silver both during Monday's rally and Tuesday's retracement.

At 1150 EDT, July platinum was up $0.30 at $411.00 an ounce, traded from $411.50 to $409.50, a range set early.

Traders pegged nearby resistance for the July contract at $413.50 to $414.

June palladium was down $0.75 at $140.25 an ounce.-Reuter