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London gold firmer,

gains boost

white metals

LONDON: Gold prices perked up slightly on Tuesday after the holiday weekend, and the rest of the precious metals complex rode bullion's gains.

Bullion closed at $392.15 per ounce in London, up $1.30 from Friday's finish. Markets in Europe and the United States were closed on Monday due to holidays.

Modest gains made in early European trade failed to follow through, however, and dealers predicted gold would be stuck in narrow range for at least another day.

A bullish factor, which probably helped boost gold, was an announcement by Canadian gold producer Placer Dome that it had closed out hedge positions covering 1.7 million ounces.

Producers hedge prices by selling gold to dealers which they have not yet mined. The dealers borrow metal, usually from central banks, and sell it to the market to pay the producer for the hedged gold. The reverse of this effectively takes gold out the market and signals that prices may rise, dealers said.

Dealers were mixed on the direction of gold's next big move.

Most said it would probably wait until after Wednesday's expiry of over-the-counter options, which give the holder the right but not the obligation to buy or sell at a given price. Options positions at the top and bottom of gold's recent price range were seen strangling prices in a tight band.

Silver followed gold higher and closed at $5.38, up five cents from Friday's London close.

Platinum used the opportunity to wrench itself out of the doldrums of the past week, nosing just over the key $400 level for the first time since May 17. It finished at $400.60.

"There's a bit of a recovery. Some of the local traders are trying to push it up on the back of the gold and silver markets," one dealer said.

Palladium was also firmer, ending up $1.75 at $130.50.-Reuter