NEW YORK, April 26 (Reuters) - COMEX gold steadied above seven-week lows early Monday, with help from a weaker dollar, but platinum continued its dizzying decline in defiance of a good outlook for usage from the auto and jewelry sectors.
Gold and silver mimicked the euro's strong bounce in Europe from a five-month low set overnight, as investors switched out of the greenback.
"The euro traded down to the $1.1760 area during Tokyo time, so it didn't feel too strong for gold," said a bullion trader. "But it started drifting higher in London and spiked during New York time so that also gave support to the market."
The June contract at 9:57 a.m. EDT (1357 GMT) was up $1.80 at $397.50 an ounce, trading from $394.30 to $398.80. Heavy fund selling knocked gold to $390.20 last Wednesday to its lowest since March 3.
The retreat was met with buying by physical bullion merchants and the liquidation of speculative long positions made traders more comfortable getting back in.
The CFTC reported late Friday that the net noncommercial long position shriveled to 73,276 contracts from 138,696 contracts in the week to last Tuesday.
"The large speculators were massive sellers as the commercials were equally massive buyers," wrote Leonard Kaplan, president of Prospector Asset Management in a client note. "The statistics above clearly demonstrate that the physical market has reawakened, and with a vengeance."
Consumers in India, the Middle East and Asia are very sensitive to prices, and physical buying dried up when gold prices were advancing to the 15-year high set on April 1 at $433.00.
Spot gold was quoted at $397.00/50, up from Friday's close at $394.85/5.35. In London, Monday's morning fix was at $396.50.
May silver was up 1.2 cents at $6.175 an ounce, in a $6.245 to $6.15 range. Silver was consolidating after nose diving this month from a 16-year high at $8.50 to $6.00 on Thursday. Spot was at $6.18/20, up from $6.15/18 late Friday. The fix was at $6.225.
NYMEX July platinum was down $27.50 at $815.00 an ounce, trading at its lowest since Feb. 5. Spot platinum was quoted at $820/825.
"Platinum is a bit overdone at this point," said a trader at a refining company. "Everybody expected a bit of a correction, but $120 in a week's time is pretty extreme for a metal that is fundamentally sound."
June palladium was $6.85 lower at $274.00 an ounce. Spot was at $271/276.