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Gold shows weaker

NEW YORK: COMEX gold turned weaker at midday, drifting lower after fund selling helped cap early firmness in sympathy with a silver rally, traders said.

Gold drew little strength from slight weakness in the dollar against the yen and a rally in the KR-CRB index of commodity futures to its highest levels in over one year.

At 1245 EDT, December gold was off $0.10 at $389.80 an ounce, traded between $391.00 and $389.10. A high of $396.00 was seen on ACCESS overnight, although many traders disregard ACCESS prices due to thin, volatile conditions.

Gold was seen continuing to take its cues from the strength in silver, which has been buoyed by signs of nearby supply tightness, although worries about producer selling of gold were seen limiting that market's gains.

SILVER

NEW YORK: COMEX silver was sharply higher at midday, resuming an early rally and reaching fresh 3-1/2 month highs before again retracing.

Several traders said the market may be due for a retracement after the sharp gains of recent sessions, indicating that a near-term objective in the mid-$5.80s appeared to have been satisfied.

At 1317 EDT, September silver was up 6.8 cents at $5.765 an ounce, traded between $5.825, a fresh 3-1/2 month high, and $5.725. A wider range of $5.86 to $5.72 was seen on ACCESS trade overnight, although many traders disregard ACCESS prices due to thin, volatile conditions.

The market remained nervous amid signs of nearby supply tightness and widespread speculation that one or more players were attempting to squeeze supplies.-Reuter