(Updates with analyst comments, New York closing prices, adds
NEW YORK to dateline)
By Frank Tang and Atul Prakash
NEW YORK/LONDON, Feb 5 (Reuters) - Platinum hit a record
high above $1,800 an ounce on Tuesday on supply concerns, but
later lost steam as a dollar rise triggered profit-taking and
dragged down prices as much as 1.7 percent.
Palladium also fell after rising to its highest level in six
years, gold slipped to a two-week low after setting historic
highs last week and silver fell more than 2 percent.
"As platinum moved above $1,800 an ounce, some people
started taking profits. The market was a little bit overbought
today and you just see a consolidation at the moment," said
Michael Widmer, metals analyst at Lehman Brothers.
"But fundamentals are still very strong. We are going to
have a deficit on the platinum market this year, with shortfalls
of around 200,000 ounces by the end of the year.
"I wouldn't be too concerned about the price fall today and
still think that $2,000 is a realistic target."
Platinum <XPT=> rose to $1,809 an ounce initially before
falling to $1,770/1,775, down from $1,790/1,800 late in New
York on Monday. The active U.S. NYMEX platinum contract for
April delivery <PLJ8> settled down $16.60 at $1,781.00 an
ounce.
Analysts said a rise in the dollar also made the upward move
in precious metals prices difficult.
The euro slid against most major currencies after weak euro
zone service sector data fueled expectations that the European
Central Bank might have to cut interest rates to shore up
growth.
A firmer dollar makes precious metals costlier for holders
of other currencies and often lowers demand.
"Today, the ISM (Institute for Supply Management) report
created selling in the stock market, and that continued to put
pressure on profit taking in gold," said George Nickas, a
precious metals broker with FC Stone in New York.
The fall in the index reignited fears the U.S. economy is
slowing down despite a series of rate cuts to revive growth.
"Platinum is also being dragged down by gold, which has
fallen quite sharply mainly on the dollar," said Stephen Briggs,
economist at SG Corporate and Investment Banking.
Analysts said the worst was far from over for South African
mines, which produce four-fifths of the world's platinum, after
state power firm Eskom allowed them only limited increases in
their electricity consumption.
Platinum and palladium are used in jewelry and in vehicle
catalysts, where they help clean exhaust gases.
GOLD STRUGGLES
Gold remained under pressure after Friday's rally to a
record high of $936.50 an ounce induced profit taking, but some
dealers said the metal was still on track to touch new highs
due to uncertainties in the dollar's outlook.
Spot gold <XAU=> fell as low as $885.30 and was quoted at
$886.85/887.55 by New York's close at 2:15 p.m. EST (1915 GMT),
against $904.40/905.10 late Monday in New York.
The gold contract for April delivery at the COMEX division
of the NYMEX <GCJ8> settled down $19.10 or 2.1 percent at
$890.30 an ounce.
Weakness and volatility in global stock have recently
boosted gold as investors fled to safe-haven investments.
However, traders sold in the highly liquid gold market to cover
losses in equities on Tuesday, dealers said.
"Even what normally is bullish for the metals has been
ignored in the rush for cash," said George Gero, vice president
of RBC Capital Markets Global Futures in New York.
Gold has gone up by as much as 12 percent this year, and
physical dealers expect buying on dips from jewelers to persist,
though trading has begun to slow down in Asia ahead of this
week's Lunar New Year celebration.
London-based consultancy GFMS said on Monday that the price
of gold is likely to peak at just over $1,000 per ounce in 2008
and benefit from any weakening of the U.S. economy as investors
seek new havens for their funds. []
Silver <XAG=> fell to $16.31/16.36 from its Monday's finish
of $16.69/16.74 an ounce, while palladium <XPD=> jumped as high
as $426.50 before slipping to $411/415, versus $423/428 late in
the U.S. market.
(Additional reporting by Lewa Pardomuan in Singapore, editing
by Matthew Lewis)
