NEW YORK, Sept 26 (Reuters) - COMEX gold prices opened down Friday, then took a nose dive when heartier-than-expected U.S. growth gave a boost to the ailing dollar, traders said.
The dollar rose about half a cent to session highs on the euro after strong U.S. growth came out on Friday. Final second quarter U.S. GDP rose by 3.3 percent, up from 3.1 previously.
In reaction, gold profit-takers, some of whom had begun their selling spree late Thursday, continued to unload their heavy long gold positions on the dollar's ascent.
Typically, a stronger dollar undermines the value of dollar-denominated gold in overseas markets.
"They (speculators) certainly came in and smacked it. (Some big names) were big sellers yesterday and again today when gold broke down," a gold broker said.
"They're going after some stops. We hear there's a big one at $380.50 (an ounce on December COMEX gold). They haven't managed to get it yet. But, the day is young," he added.
COMEX December gold futures stabilized about $2.20 lower at $383.70 after a significant decline to a low at $381.50 from $387.50.
On Thursday, speculative and fund buying propelled December gold to a new contract high at $394.80 an ounce, a peak last seen in April 1996 when gold futures reached $398.
Traders said $398 now becomes 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.
While initial support broke down in the morning selling frenzy, December gold held the zone between $380.50 to $381. If that band breaks, traders said next support was $378.
As long as gold hangs in its current lofty zones, traders said to expect more volatility. Moves in gold prices may well accelerate as players trade their heavy speculative positions.
Many players said they still feel confident that gold will make another run for upside targets, possibly even on Friday.
COMEX estimated gold volume at 19,000 lots by 1000 EDT.
Spot gold bullion eased to $382.90/3.40 from its 7-year peak at $393.30 hit Thursday and down from $384.20/4.90 late Thursday. The afternoon reference price was $382.70.
COMEX December silver got slammed on Friday giving up more of the stunning gains to the three-year high at $5.3950 hit Thursday. December silver gave up 26 cents from Thursday's peak to Friday's low. December silver steadied 4.70 cents lower at $5.1750 an ounce, in a $5.1350 to $5.2450 range.
Spot silver slid to $5.13/5.15 from the late Thursday quote of $5.18/5.20. Silver was fixed at $5.19.
NYMEX October platinum dropped $16.80 to $699 an ounce. Spot platinum tumbled to $696.00/701.00, down sharply from $715/719 late Thursday.
December palladium fell $6.10 to $212 an ounce. Spot fell to $203/10 an ounce, well below the $213/218 on Thursday.