LONDON, April 25: Gold bullion firmed in Europe on Tuesday, but further volatility was expected with the market seeking a footing below a recent 25-year peak of $645.75 and keeping a close eye on currency and oil markets, traders said.

Turbulent silver also bounded higher, hurdling the $12.00-an-ounce level, but traders were wary that current choppy conditions could see a rapid reversal in all precious metals.

It is all very steady at the moment, but it could come back any time. If there is any type of selling, we will be back down very quickly, a European trader said.

By 1210 GMT, spot gold was $627.40/628.40 an ounce, compared with $622.80/623.80 late in New York on Monday.

I think people have lost direction at these levels, said Ellison Chu, senior vice president of Standard Bank Asia in Hong Kong. There’s some physical interest in silver and gold, but not much.

Chu said people would keep their eyes on oil prices, the dollar and the situation in the Middle East.

US June light crude futures were 35 cents higher at $73.68 a barrel in electronic trading.

Silver recovered strongly, with prices up at $12.43/12.53 an ounce from $11.86/11.96 in New York.

Barclays Capital Inc. has deposited 1.5 million ounces of silver with a custodian to back its planned iShares Silver Trust, said Barclays Global Investors in a filing with US regulators on Monday.

Traders said this has largely been factored in to sentiment now.

Silver prices have soared as much as 67 per cent this year, hitting a 23-year peak of $14.68 last Thursday, on expectations an exchange-traded fund under review will boost demand.

In the platinum group metals (PGMs), research group GFMS said high prices are likely to further erode platinum jewellery demand in 2006, while mine output will grow, pushing the metal into surplus for the first time since 1998.

Platinum stood at $1,123/1,128 an ounce from $1,118/1,123 in New York, having hit a record $1,130 last week. Sister-metal palladium rose to $355/360 an ounce from $353/358.—Reuters