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Gold prices weaker

NEW YORK: COMEX gold was weaker at midday after slipping to fresh 5-1/2 week lows on what floor traders said appeared to be fund long liquidation.

Stop-loss selling was also noted as the market broke below Monday's lows, although prices quickly stabilized.

At 1235 EDT, June gold was off $0.80 at $394.70 an ounce, traded from $396.30 to $394.00, the lowest for a most-active contract since March 7 and the June contract's lowest since Jan 2.

Dealers quoted bullion at $392.20/$392.70.

Monday's open interest showed a modest decline of 1,982 lots to 203,822, suggesting long liquidation during the day's weakness.

Floor traders said the market found good support from the trade this morning, as it had during Monday's declines, although one said the June contract may nevertheless dip further to test support at $392/$391.

The market was getting no help today from the grain and energy markets, which slumped after strong rallies last week. The KR-CRB index of commodity futures fell 2.0 to 257.28.

In the options pit, one trader noted selling of October $400 calls this morning.-Reuter