NEW YORK, Oct 27 (Reuters) - COMEX gold opened weaker Monday, digesting a $23 rally that tickled the 2003 highs last week, amid confidence that the bull market has room to run to the $400 an ounce area if the dollar continues to sell off.
A marginal rebound in the dollar from Friday's 15-day low against the euro curtailed overseas buying interest in gold, which was already looking way overdone, technically.
December gold at 0910 EST was off $1.40 at $387.80 an ounce. It traded from $389.00 to $386.00 after topping Friday at $393.00 an ounce, just short of the 7-year high at $394.80 on Sept 25.
"This certainly generates significant upward momentum for staging a renewed breakout, challenging the long-awaited $400 psychological barrier, or surging even higher," analyst Timothy Evans at IFR/Pegasus wrote late Friday.
After profit-taking in Asia, bargain hunting emerged in early New York trade, dealers said, keeping futures from falling too much.
"The market has benefited recently from further weakening of the dollar against the euro along with the softer tone in the equity markets at the end of last week, and the majority of buying has come from professional sources," wrote Rhona O'Connell, head of market research at the World Gold Council.
Dealers said noncommercial buyers were getting long again, more comfortable after prices fell to $366.50 an ounce 10 days ago. Seasonal physical demand from India and the Middle East was also a key underlying support to prices.
The CFTC said late Friday in its Commitments of Traders report that the net speculative long positions at the COMEX rose to 80,684 gold contracts as of last Tuesday from the prior week's 76,892. That leaves the market plenty of room before returning to the extreme overbought position of almost 123,000 contracts in the September run-up.
"There seems to be some fund accumulation going on right now and that's why the market is not going anywhere in here," said a floor broker. "(The COTR) went up and will keep going up because open interest is down to (252,897 lots) and last time we were at these prices it was at 290,000."
Spot gold was quoted at $387.45/8.15, down from $388.35/9.05 late Friday. London bullion dealers fixed the morning reference price at $386.75.
December silver was down 1.5 cents at $5.15 an ounce, trading from $5.17 to $5.11. On Friday it followed gold to its highest since Sept 29 at $5.22 an ounce.
Spot silver was priced at $5.13/15, down from $5.14/16 at the close. The fix was $5.125 an ounce.
The NYMEX January platinum contract was up $4.40 at $742.00 an ounce. Spot platinum fetched $743.00/748.00.
December palladium was off 5 cents at $198.00 an ounce. Spot palladium fetched $196.00/201.00.