LONDON, June 23: Gold prices are under threat of being swept towards four-year lows on Monday as bearish sentiment floods the market, dealers said.

"A fix under $338.00 would be another indication that the market is fundamentally weak," one dealer said earlier.

Gold fixed at $336.95 per ounce, down from $338.20 on Friday and its lowest since $336.90 on February 12, which in turn was its weakest fixing since April 13, 1993.

Dealers reported good two-way business around $337.00-$337.50, but the market was being very cautious about taking positions.

"Staying neutral is the only way to be right now," one dealer said, although he acknowledged that sentiment was overwhelmingly bearish.

"The sooner it goes much lower the better. It might hold here or slide. It would take something miraculous to get this price up," he said.

Prices began to loosen their grip on $339.00-$340.00 on Friday, when moderate fund selling took them lower in New York.

The latest weakness came on a combination of a strong dollar and physical demand declining as the northern hemisphere summer lull in consumption reduced offtake.

"There are only producers and consumers in the market. Speculative interest is at a very low level, and who can blame them when they see those holding gold (the central banks) wanting to sell it," a dealer said.

Flimsy support weakened late last week on news that the Belgian government proposed selling up to 133 tonnes of gold over five years in the form of commemorative coins beginning in 1999.

Despite low tonnage and the lack of immediacy, dealers and analyst saw the announcement as simply the latest in a long list of bearish news from central banks and other institutions stretching back over the past year.

Silver was steady at $4.73/$4.75, down a cent, but not involving much business after several spikes upwards had failed between $4.80 and $4.90 in the past two weeks.

Copyright © 1997 Indian Express Newspapers (Bombay) Ltd.