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London precious

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LONDON: Support for the gold bullion price at just over $394.00 per ounce seemed to be holding on Tuesday, raising hopes for a rise later, dealers said.

However, one said, "There is not too much downside risk, but if the $394 support falls we could see $392."

Gold closed in London at $394.35, 40 cents down on Monday, after a quiet day's business ahead of holiday weekends in Europe, the United States and Hong Kong, dealers said.

The market received little encouragement after London closed on Monday. A quiet New York market found some physical interest at $393.00-$394.50 but Tokyo and Hong Kong shaded a few cents from New York levels.

In Tokyo, where business was also light, the market was capped by producer selling on behalf of Australian miners at $394.60, dealers said.

Gold could be finding a base after last week's bid to clear the psychologically significant $400 level last seen during a brief rally at the beginning of March.

That followed a speculator-driven rally at the beginning of the year which swept gold to its highest fixing since February 1990 at $416.25 on February 2.

"We are still in a correction phase after the rise to $401 and return to the $395 area," a dealer said.

"Gold could get back up to $397 if the $394 support holds well," he added.

According to data gathered from historical price charts, gold was bracketed by major support at $391.25 -- the March low -- down to $388. On the upside the March 27 high of $397.80 would present resistance, technical analysts said.

"It needs some fresh dramatic news to get something moving again. Taiwan could have done that but fizzled out after the election," one dealer said.

Gold was held steady in the high $390s last month when Chinese naval manoeuvres off Taiwan during Taiwan's presidential elections attracted some "safe haven" gold buying as international tension rose.

Lease rates -- the cost of borrowing gold -- remained fairly high at around 1.50 percent for a month, reflecting some borrowing against short dates, dealers said.

Silver ended unchanged at $5.54, while platinum was still near its lows after being sold off last week.

It was indicated around $406.25, down $1.00, while palladium was up 25 cents at $140.75.-Reuter