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Lower gold

prices seen

boosting asian

demand

HONG KONG: Hong Kong and Singapore gold dealers said prices would not move significantly next week, but they expected regional gold demand to pick up if prices slid further.

Some bullion traders in Hong Kong added that a slump in gold prices could introduce volatility and shake the market out of its current sluggishness.

"If the US$388 level is broken, the market may go down to US$382," said a local dealer at a large Hong Kong trading firm.

"That would be good for the market, because there would be more volatility, more movement," he said.

Gold traders said the market had reached a bottom and should perk up next week.

There will be some demand for gold at the US$390 level, they said.

Bullion in Hong Kong slipped gradually over the week, closing at US$391.10/60 an ounce on Thursday, compared to a Monday close at US$393.70/90.

"It's time for the gold market to look up," said a bullion dealer at a major local bank.

"I would be slightly more in favour of prices moving back up, but it's borderline," a more cautious trader said, predicting that gold trading would remain range-bound.

In Singapore, renewed physical demand, triggered by lower prices, pushed the gold premium higher this week and traders said they expected further end-consumer buying if prices slid further.

The premiums rose to 55-60 U.S. cents an ounce over London spot, from 50-55 cents last week.

Gold's traditional premium band in Singapore is between 45 and 60 cents.

"There has been strong physical demand as prices dipped below $391-$392 an ounce, much better than when gold was at $395/$396 level," a U.S. bank trader said.

"Much of the demand came from India, Indonesia and Thailand," he said.-Reuter