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Gold and silver in tight ranges in late Europe

LONDON: Gold held in a tight range in late precious metals trade on Monday while silver was steady despite jitters over possible sales from China, dealers said.

Gold hovered around $281.50 a troy ounce for most of the day and touched a high of $282.25. It was last at $281.60/$282.20 from the New York close at $281.50/$282.00.

Dealers said gold firmed on light buying but dropped later in light volumes.

"Gold and silver are fiddling around in tight ranges, looking for direction," one bullion dealer said.

Bullion dealers said the $280 level was crucial for gold, which dropped around $10 last week as funds aggressively sold out of positions build up ahead of the end of last year amid concern over possible disruptions due to millennium bug problems.

"If it breaks $279.00, I expect we might see $274.00 soon," a dealer said.

Silver held steady with good support at the $5.10 level. Prices slipped last week after news of possible sales from China.

An official from the People's Bank of China was quoted on Sunday in China Daily Business Week as confirming last week's reports that China planned to sell some of its silver stocks.

"Everyone is worried about the situation with China and are waiting to see what happens there," a dealer said.

By selling on the world market, China, which is deregulating its domestic silver market, hopes to ease a glut.

The Chinese central bank purchased 2,900 tonnes of the country's surplus production between 1994 and 1998. Production outpaced domestic demand in the 1990s.

But industry sources said that while the PBoC is likely to give guidance to producers in their debuts on the international market, the disposal of its own stockpiled silver is not imminent.

But London dealers said they would be wary being on the long side in silver.

"I would be very wary about going long on silver at any level. If any of this story about China is true, then it is going to be very nasty," one dealer said.

He said the Chinese sales would probably take the form of outright sales or near-dated forward transactions.

Spot silver was last unchanged at $5.15/$5.17 a troy ounce.

Platinum held steady and was last at $416.00/$421.00 from the New York close at $414.00/$419.00. Palladium firmed on light industrial buying to $446.00/$451.00 from the New York close at $441.90/$446.90.-Reuters