NEW YORK, Sept 27: Both COMEX gold and silver markets, in hugely overbought situations, finished with substantial losses again on Friday, although selling in both markets stopped above key support levels and set the stage to renew their ascent next week, traders said.

In a technical rout that began late Thursday, traders said, both gold and silver markets were overdue for price corrections. Once the trigger came from a dollar strengthened by unexpected improvement in the U.S. GDP report, heavily laden gold holders took the opportunity to unload and take profits.

COMEX December gold futures added to losses by the end to finish $4.10 lower at $381.80 an ounce. The range extended down to $380.10 from a high at $387.50 an ounce.

COMEX estimated gold volume at 52,000 lots at Friday’s close, compared with 78,776 lots on Thursday. Open interest rose by 1,460 on Thursday to 296,135 lots.

Noting that the current consolidation range is a wide one, one dealer said he thought gold could encounter more selling as it consolidates its recent gains and losses. If December gold drops below $380, look for $372 to $369, he said.

Some players said they thought gold could try to retackle resistance levels, but added that quarter-end book squaring could set the stage for more volatilility in the next few sessions.

Traders said $398 was now key resistance for COMEX gold on the way to the psychological objective at $400. One broker noted that gold had trouble at $398 in 1996 and again in 1991.

The selling spree begun on Thursday accelerated on Friday when the dollar rose about half a cent to session highs on the euro following stronger-than-expected US growth results.

Yes, the dollar did strengthen. But this is a gold move, a dealer said of Thursday and Friday’s technical sorting out. Spot gold bullion eased to $380.60/1.10 from its 7-year peak at $393.30 hit on Thursday.—Reuters