A lack of short covering combined with producer selling was weighing on the price. Silver also looked soggy and vulnerable to slippage, traders added, particularly as there was talk of central banks sales of the metal.

Gold - Seen under pressure with support at $275/76 and stiff resistance at $281/82, traders said Thursday. "It will be a slow hike to get the price back to $280 this morning," one European trader said.

On the upside analysts said any rally would be capped at $290/95 because of producer selling. Some has already been evident with the strengthening of the South African Rand and the Australian dollar.

Australian dealers and analysts see gold holding reasonably strong levels and inducing Australian producers and funds into further sales at above A$485 an ounce.

But good physical buying was also noted.

"Physical demand from European markets like Italy is helping to support prices," a European dealer said. With gold at a low in Lire terms users in the jewellery sector were snapping up metal to make goods for the Christmas period.

Earlier in the week, Germany saw good demand with one trader reporting a six-fold increase in business over this time last year. India was also beginning to surface in the market traders added. It is the world's largest consumer of gold.

At 0650 GMT spot gold was quoted at $278.45/278.95, down from Wednesday's close.

Silver - Was under pressure and had no real support until $4.66, traders said Thursday. Trader talk of European central bank sales of silver was preying on market sentiment.

Poor physical offtake from the Far East was also impacting. But if the US stockmarket continued jittery silver could rally, traders added and break through $5.00. At 0650 GMT spot silver was quoted at $4.77/4.80, down from Wednesday's close.

Platinum - Dipped lower overnight following the rest of the precious metals lower.

At 0650 GMT spot platinum was quoted at $360.00/362.00, down from the previous day's close.