Analysts and bullion dealers were sceptical that the beleagured precious metal had turned the corner and focused more on fundamentals than on forecasts by the industry-funded World Gold Council (WGC).

"I think the things that are still driving it (gold) are more what the hell is going on in Asia, perceptions of the (Japanese) yen, what the US dollar is going to do," said Keith Goode, gold analyst at Bell Commodities.

On Wednesday WGC reported that gold demand rose by more than 50 per cent in the second quarter of 1998 to 634 tonnes from the depressed first quarter. This left demand in the first half of 1998 still 28 per cent down on the first half of 1997, at 1,040.9 tonnes.

WGC also forecast continued consumption gains by gold in the rest of this year.

Spot gold was down to $283.10/3.50 in Australian/Asian trading at about 0330 GMT (1.30 pm.) from London's close of $283.90/$284.90. This continued gold's slide from slightly more than $285.00 after the release of the WGC report.

A dealer attributed Thursday's decline to market talk that Russia was selling gold, despite statements by the country's gold exporting banks that the de facto rouble devaluation would have little or no impact on gold and silver exports.

This dealer agreed with the WGC that any Russian gold selling would be in the form of swaps, with sales based on buyback guarantees and therefore logically of little effect on the gold market.

But whatever the mix of influences, WGC was unable to drive the bears away on Thursday.

"There have been so many Times and so many calls on the thing recovering...maybe this time," Goode said. He would see real recovery prospects if gold rose through $288 and on to $300.

"Hope so, cautiously optimistic," Goode said when asked if the WGC was right in predicting a continued recovery in demand. Gold markets should head into a more positive area anyway with northern hemisphere holidays ending and traders returning from holidays, he said.

But Goode, the realist, sees gold prices ultimately dependent on Japan and the world economy. It was encouraging that gold was holding an area around $283 and not falling further.

An equally pragmatic bullion dealer, not wanting to be named, said that with the market under pressure, price action suggested lower levels would be tested.

The crucial level was still US$282. After this the next target would be $278, he said.

This dealer described the WGC gold demand figures as "surprising" with imports by Japan and Taiwan down and the view from Asia that the gold market would get considerably worse before it got better.

Australia's gold sector, meanwhile, still faces the prospect of accelerated rationalisation through mergers.

"We haven't seen the tip of the iceberg yet. There's an awful lot more activity to occur in the company year, there's a lot of corporate activity waiting in the wings," Goode said.