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Comex gold firms further at midday

NEW YORK: COMEX gold firmed further at midday, buoyed by apparent pre-holiday short covering amid sentiment that the market's recent downward slide had run its course, traders said.

The market will be closed Good Friday, and many players were expected to be absent for the Passover holiday which begins this evening.

At 1245 EST, June gold was up $1.50 at $398.10 an ounce, traded from $398.30 to $396.70.

Dealers quoted bullion at $395.30/$395.80.

Floor sources said a fund helped get the market moving this morning with a bid for 500 lots around $397 an ounce.

Refco Inc analyst James Steel said the market appeared to have absorbed a number of bearish developments in the past week or two, including an announcement of further gold sales by the Belgian central bank and indications of stepped-up producer selling from South Africa.

"The market has come to realize the large play now is not on the downside," he said.

Gold's open interest continued declining Tuesday, shedding a modest 1,554 lots to 189,385, its lowest in nearly three months. The drop in open interest during the past four days has been interpreted by several market sources as reflecting a constructive shake-out of speculative long positions taken during a rally nearly two weeks ago.-Reuter