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LONDON: The gold price slipped back in Europe on Wednesday as silver's dramatic rally stalled, at least temporarily, dealers said.

Gold closed at $382.75 an ounce, down on Tuesday's London close of $384.05. Business was subdued and dealers foresaw little prospect of a pick-up in activity near-term.

"Gold is dead in the water," one said.

But prices should not fall too far and good buying was expected to stabilise the market between $382 and $383.

Some thought a strong recovery possible, followed by another attack and clearance of the $385 hurdle.

Silver was more active, although prices were well off recent highs. It closed at $5.61 in early European trade, around 10 cents below its previous London close.

The fall, which dealers had expected following the market's sharp rise from $5 at the beginning of August, could now extend further, they said.

"There's been very good two-way trade on silver centred on $5.60," one dealer said. "It looks poised for a 10 to 20 cent move but it could be in either direction."

But supplies of metal remained scarce and the speculative squeeze firmly in place. However, the focus had now shifted to the New York futures market and fears over warehouse stocks there, which have plummeted to their lowest for six-and-a-half years.

Analysts said metal had probably been shipped from New York to London to ease tightness in the spot market here.

"The shifting of the squeeze is a bit like playing ping-pong -- cause tightness in one market, force stocks across the Atlantic, and then do the same with the other," commodity brokerage GNI commented.

Platinum, at $426.25 an ounce, was $4 under its last close in routine business which took a lead from silver.

Dealers said there was little impact from news of a strike at a refinery belonging to major South African producer Implats.

Around 300 workers have struck over pay but management has said production would not be affected.

Palladium closed quiet and $2 lower at $150 per ounce.-Reuter