LONDON, July 9 (Reuters) - Gold softened again on Thursday before hitting decent support at the $291.50-an-ounce level, a nearby floor arresting further currency inspired drops, dealers said.
Gold fixed just higher at $292.20 an ounce in the morning, 20 cents up on the previous afternoon's figure, after spot metal softened from its European opening amid yen weakness versus the dollar.
It was last at $291.80/$292.30 versus $293.00/$293.50 at its previous New York close.
''It's all a bit soft this morning although there's definitely good support at $291.50 and probably lumpy resistance around the $295.50 area,'' said one London dealer.
''There's been some lending coming in this morning in the gold and silver. It's people getting out of their long positions which means there's more metal about,'' she added.
Gold dropped a couple of dollars on Wednesday both on softness in the yen versus the dollar and European Central Bank news on reserve policies which dealers took as bearish.
ECB President Wim Duisenberg said gold would make up 15 percent of the new bank's planned 39.5 billion Ecus ($43 billion) of reserves, adding that the decision had no implications for overall central bank gold reserve levels.
He added that dollars, gold and other foreign reserve assets held by national central banks would be brought under indirect control of the European Central Bank by the end of 1998, a remark brokers GNI saw as being positive for gold.
''Firstly, the statement implies that no European nation bank gold sales will be seen before the end of the year, which could tighten the market, and secondly because it will remove the depressing competitive pressure seen previously (for banks to get any sales in first),'' it said in a report.
''In addition, it is one thing to centralise control of gold reserves, another to reach a consensus on whether or not they should be sold,'' GNI said.
''We see this news as providing a floor for the gold price for the next six months and tightening physical conditions should mean that prices will rally from here given the slightest encouragement from the Far East,'' it added.
Economic problems through Southeast Asia have meant bullion dealers have focused on the dollar/yen strength, with weakness in the yen taken as a bearish signal for gold demand in the region.
That continued on Thursday as the dollar strengthened above 140 yen on position-squaring late on in Tokyo.
''Gold still looks poor,'' said a second London dealer.
''It managed only a meagre bounce in New York, and Tokyo have sold it lower on the stronger dollar overnight,'' he said.
''So long as the yen does not recover, I think we will test the lows again, and break lower to $290.00 as next support.''
Silver softened in sympathy with gold and was last trading down two cents on New York's Wednesday close of $5.34/$5.37.
Platinum was also just down at $378.00/$380.00, $1.00 off New York while palladium was at $291.00/$301.00 versus $289.20/$299.20.
06:43 07-09-98
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