The optical/IR counterpart of the 1998 July 3 gamma-ray burst and its evolution

We imaged the X-ray error box of GRB 980703, beginning 22.5 hr after the gamma-ray event, in both the optical R and near-infrared H bands. A fading optical/IR object was detected within the X-ray error box, coincident with the variable radio source reported by Frail et al. in 1998, who also detected the optical transient independently of us. Further imagery revealed the gamma-ray burst (GRB) host galaxy, with R = 22.49 +/- 0.04 and H = 20.5 +/- 0.25, the brightest so far detected. When excluding its contribution to the total flux, both the R- and H-band light curves are well fit by a power-law decay with index alpha similar or equal to 1.4. Our data suggest an intrinsic column density in the host galaxy of similar to 3.5 x 10(21) cm(-2), which indicates the existence of a dense and gas-rich medium in which the GRB occurred, thus supporting the hypernova model scenarios.