960419

Gold popped back

above the $ 390

barrier

LONDON: Gold popped back above the $390 barrier in the afternoon on short-covering, but the market may see more bouts of speculative selling, dealers said.

"They're going to keep it under pressure," one said.

Gold fixed stronger at $389.90 per ounce, $1.00 stronger than the morning, which was the lowest since January 2.

Shortly after Comex opened, prices gained over a dollar after hovering below $390 most of the morning in a quiet European session.

"When they couldn't push it any lower, there was some short-covering ahead of the weekend," a dealer said.

Technical analysts say the market has become oversold near-term and a correction towards $394 was on the cards.

"The market is very short," one dealer agreed.

If prices continue to hold above the morning's low bid of $389.25 further short-covering would be seen towards the end of the day, dealers added.

Heavy option activity has also been seen, with interest revolving around the $390 strike by players on both side of the market, a dealer said.

The OTC options expiry next Friday may provide some impetus to the market next week.

Until now, however, most open interest was said to be at $400, which was seen unlikely to be attained.

Physical demand, which was expected to come into the market at lower levels, was not appearing as yet, dealers said.

"There is some, but it is not great," one said.

Physical buyers may be waiting until prices bottom out before they start loading up again, he said.

Silver bounced with gold, erasing all of its overnight losses at one point.

During the morning the market was probing support at $5.25, but prices largely held above that level.

Resistance was pegged at $5.40.

Bids have been seen so far in a range from $5.30 down to $5.24.

Platinum rebounded with the others, jumping back above the psychological $400 level.

Bids were quoted so far from $402 to $397.80.

Key support was pegged at $398.

Palladium, however, was little moved, with bids quoted so far in a range from $135.75 to $133.50.-Reuter