WELLINGTON (Dow Jones)--Precious metals were trading lower in Asian session Friday with gold prices volatile and trading in a narrow range after European leaders agreed to a rescue package for Greece. While the safe-haven attraction of the yellow metal could be dented a bit after the rescue package, traders and analysts said doubts about the long-term sustainability of the bailout packages and slow global economic growth are likely to keep the downside risk to the yellow metal limited. At 0530 GMT, spot gold was at $1,588.40/oz, down $1.80 from its previous close. "Gold clearly seems under pressure after the EU agreement on Greece bailout," said a Singapore-based trading official of a bank who expects a possible short-term correction in gold price to about $1,570/oz. The yellow metal had rallied in the past few months as worries about a default on sovereign debt by Greece and other European nations dominated investor concerns. European leaders Thursday agreed to a financial aid of 109 billion euros for debt-laden Greece and a plan to help Ireland and Portugal. "Lingering doubts as to whether the latest (package for Greece) is a sustainable long-term solution should (still) help bolster the yellow metal," said Peter Grant, resident economist of USAGOLD-Centennial Precious Metals Inc. Besides, comments by ratings agency Standard & Poor's indicating that there is a 50% chance of the U.S. government's credit rating being cut within the next three months is also seen as supportive for gold. Traders expect silver to correct along with gold, after breaching the key $40/oz resistance level earlier this week. "There is a lot of demand if silver falls to $36/oz-$37/oz," a Hong Kong-based trader said, adding that there is only moderate physical demand for silver bars at current prices. Spot silver is currently trading around $39.01/oz, down 31 cents from its previous close. In the case of platinum, Commerzbank said supply is likely to be hit as Africa's National Union of Mineworkers has rejected a wage hike offer by state-owned power utility Eskom Holdings', potentially rising the prospect of a mine strike. Traders, however, said the demand for platinum group of metals has been low as industrial growth continues to be sluggish. Both platinum and palladium were trading lower Friday. While platinum was down $2 at $1,780/oz, palladium was also down $2, at $804/oz. -By Arpan Mukherjee, Dow Jones Newswires; 64-4-471-5990; arpan.mukherjee@dowjones.com

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