London Gold Stronger, But Seen Capped At $388

Gold's been in a narrow range and I don't think anyone sees it moving up in the next few days, a dealer said, adding that Monday's market holiday in Britain and Hong Kong would also slow down trading.

Bullion fixed at $387.50 an ounce, compared with $387.00 on Thursday afternoon and $386.90 in the morning.

Some analysts predicted that if support at $386 held, gold could test the $388 and then $390 resistance levels next week.

Gold and silver popped a little higher on Thursday afternoon in a burst of buying by investment funds in New York.

But neither metal made much progress and quickly came off highs.

 

Their rise followed the German Bundesbank's cut in a key money market rate. Some analysts said an easier global monetary policy may eventually encourage demand for precious metals.

But most dealers agreed that, at least immediately, gold had ignored the rate cut. I don't think it's had any effect on the precious metals, one said.

Silver was steady at $5.23 an ounce, unchanged from Thursday's London close.

Like gold, it was expected to remain range-bound after failing to conquer the key resistance at $5.25 on Thursday.

But silver's rally at the start of the week, which took it well above previous resistance around $5.15, was keeping the market slightly on edge.

The market is a little nervous, a dealer said. It's high enough to have to come back. There's a slimmer chance of it going up, and if we break through $5.27, we'll see $5.35.

Platinum was a touch firmer at $399.75, while its sister metal palladium firmed by $1.25 to $125.00.