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Gold falls in Europe

as silver rally stalls

LONDON: Precious metals drifted lower in quiet European trading on Tuesday with silver, the leading market, pausing for breath after recent heavy gains.

Gold was fixed at $383.55 an ounce against a close on Monday at $384.35. Its range so far was a narrow $383.40 to $384.50.

Dealers said business remained sluggish and that without continued silver strength, the market would probe lower levels.

Silver, which hit fresh highs above 580 cents an ounce on Monday, eased back towards 570 cents on Tuesday. Dealers said the sharpness of the recent advance meant that a price correction would now be beneficial.

"It has gone up so far, so fast that a small pull-back from here is not surprising. Silver is in no man's land," one said.

At the start of August silver traded as low as 500 cents.

But news late on Monday that warehouse stocks in New York fell by another 5.78 million ounces will again help to fuel bullish sentiment on both sides of the Atlantic.

Stocks there have fallen by 25 million ounces over three consecutive days and now stand below 150 million, their lowest for six-and-a-half years.

Market analysts have speculated that metal was being shipped here from New York to alleviate tightness in the spot market.

And on Tuesday morning British Airways confirmed that the airline had participated in shipping silver from the United States.

"I heard last week that we did participate but I have no more information. I would be surprised if we were the only airline involved," a BA official told Reuters.

Dealers said the impact of the speculative squeeze had moved from the London cash market to the September contract on the Comex futures market in New York.

"The focus has shifted and it looks as if the squeeze will carry on there," one dealer said.

Platinum followed silver's lead and eased off from its previous close. It was trading around $2 down at $430.

The market was quiet and attracting little independent interest. Analysts have pegged a trading range inthe near term between $428 and $435.

Palladium was also inactive and holding steady at $150.-Reuter