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Early COMEX gold in neutral as PGM squeeze continues

NEW YORK, Aug 28 (Reuters) - COMEX gold was sluggish near break-even early Wednesday, waiting for morning options expirations in London, while palladium and platinum continued to shoot higher as speculators strong-armed the NYMEX.

The 0930 EDT expiration of over-the-counter options kept early activity in check in New York, and the approach of the three-day U.S. Labor Day weekend was another reason for traders here to sit on their hands.

COMEX December gold at 0937 EDT was off 10 cents at $313.80 an ounce, trading in a skinny $314.10-$312.40 range. Spot gold was indicated at $312.30/2.80, near Tuesday's close at $312.25/75 but back up from London's early fix at $310.95.

Dealers said they were watching the stock market for signals, especially the XAU index of gold and silver mining shares which recently has been a reliable leading indicator for daily gold price moves. But signals from financial markets were mixed.

The XAU was off about 1.7 percent in early trade, pressuring gold but defying custom by moving in the same direction as the Dow Jones industrial average.

"The dollar is neutral to a little stronger -- the Aussie (dollar) is not as high as it was yesterday, it came off a little bit. We're looking for a neutral day here," said a floor broker.

September silver was up 0.7 cent at $4.51 an ounce, trading $4.54-$4.485. Spot silver was at $4.51/43, up from $4.50/52 late Tuesday. It fixed at $4.50.

The floor broker said the $4.55 resistance level could be a daily pivot for silver.

October platinum hit a contract high early Wednesday at $578 an ounce, and was last up $10.30 at $570 an ounce. Spot platinum was at $568/576.

Fund buying in palladium continued to drive the market. September palladium was up $9.65 at $372 an ounce and spot was quoted at $368/380.

Palladium futures soared 17 percent this week but dealers said a fundamental justification for the rally was not obvious.

"It's all fund related still, from what we're hearing," said a dealer at a platinum group metals refinery.

He continued, "I think they are trying to dominate it and move it in their favor, so we'll see if it works for them. The way it shot up, some people have got to bail at some point."