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Gold close lower in Europe

LONDON: The gold price closed just 50 cents lower on Friday, having survived the downdraft from a midafternoon crash in New York silver futures.

Gold finished at $384.00 per ounce and silver recovered to unchanged at $5.26, having touched $5.12.

But platinum and palladium were lower at $416.50, down $5, and $147.25, down $3.75, respectively.

Tightening supplies of silver kept the markets buoyant in early business before a wave of speculative selling lopped 15.5 cents off silver futures price and set the rest of the precious metals teetering also.

Dealers speculated that a squeeze on silver supplies was under way, engineered by one or more financial institutions in an attempt to push the price upwards.

They said the play may be linked to the options expiry after the close of the Comex futures market in New York.

"There is definitely something going on," one dealer said. "But nobody knows who is behind it and it's making everybody very nervous."

The price would almost certainly be lower were it not for silver's strength.

"The market looks pretty awful but all eyes are on silver and the options expiry tonight," a London dealer said.

Another added, "I wouldn't be surprised to see silver above 550 cents or below 480 by Monday morning. A big move is coming."

Renewed dollar strength was an additional negative factor for the whole precious sector, although some dealers interpreted gold's muted reaction so far as an encouraging sign.

The precious metals largely ignored U.S. inflation monitoring data released at 1230 GMT.

The July consumer price index was on forecast up 0.2 percent, while July retail sales were weaker than expected, falling 0.1 percent versus analysts' average forecast of a 0.2 percent gain and June's upwardly revised rise of 0.8 percent.

Platinum and palladium were friendless all day and finally succumbed to the pressure when disillusioned investors sold out.

Dealers said August was a traditionally bad month for the platinum and palladium prices due to slack industrial demand.-Reuter