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Gold close just firmer in Europe

LONDON: The gold price closed just higher on Wednesday after a silver-led attempt to rally into new territory was turned back by speculators selling into the rise, dealers said.

Gold closed at $384.65 an ounce, up 15 cents from Tuesday and just off the day's high, while silver was six cents firmer at $5.31 and platinum and palladium were up $2.00 at $424 and $0.75 at $153.25 respectively.

Silver remained the focus of attention with nearby supplies staying very tight. Dealers offered several reasons for the scarcity of metal but most said it was likely a technical squeeze, engineered for speculative purposes.

It was also possible that the play was linked to the expiry of options on the Comex futures market in New York on Friday.

As a result the silver price has been edging up but a brief rally shortly after the New York markets opened met enthusiastic selling at the day's high of $5.34.

"It has some way to go on the upside yet, but it could all end in tears," one market analyst observed.

Dealers said gold may advance slightly in the near term, mainly on the back of a firm silver price but that producer sales expected above $385 would limit rally potential.

A decline in the German repo rate was seen as mildly bullish for the precious metals but most analysts do not expect a full interest rate cut to follow at the Bundesbank council meeting on Thursday.

World demand for gold showed strong growth in the second quarter of 1995, rising over 15 percent to 663 tonnes from the same period last year, the World Gold Council said on Wednesday.-Reuter