(Updates with quotes, prices)
By Atul Prakash
LONDON, Feb 6 (Reuters) - Platinum hit an historic high on
Wednesday as the market remained concerned about supplies from
top producer South Africa following a power crisis that has hit
mining operations there.
Other precious metals also advanced, with gold rising more
than 1 percent to trade just below $900 an ounce and silver
gradually moving towards recent 27-year highs.
Spot platinum <XPT=> rose as high as $1,814 an ounce before
easing to $1,805/1,810 at 1240 GMT, against $1,770/1,775 late in
New York on Tuesday.
"The lack of spare power generating capacity in South Africa
is not only affecting output in the short term but has the
potential to delay new projects by months or even years," Tom
Kendall, metals strategist at Mitsubishi Corporation, said.
"Speculators have got this platinum bull by the horns and
could easily drive the price towards $1,900. The market will
remain very volatile at least until Anglo Platinum and Impala
have released financial statements next week."
He said the platinum market was likely to see a deficit of
at least 350,000 ounces this year and perhaps much more on top
of last year's 375,000 ounces shortfall.
South Africa's government appealed to mining firms for help
in cutting power consumption on Tuesday to ease a power crisis
caused by the failure of electricity generation to match
economic growth. []
"The main problem with the platinum market is the very small
stocks of physical liquidity. We estimate that total bullion
stocks are less than 2 million ounces, and possibly as low as
one million ounces," John Reade, analyst at UBS Investment Bank
said in a client note.
"As well as buying platinum on dips, consider borrowing
platinum in anticipation of a squeeze this year," he said.
GOLD NEAR $900
Gold bounced back towards $900 an ounce as recent drops
attracted physical buyers and bargain hunters, analysts said.
Spot gold <XAU=> rose as high as $898.20 an ounce and was
last quoted at $896.50/897.40, against $886.85/887.55 late in
New York on Tuesday, when it hit a two-week low of $885.30
mainly on a firmer dollar.
The metal rose to a record high of $936.50 on Feb.1.
"Both the external and fundamental drivers remain price
positive for gold," said Suki Cooper, precious metals analyst at
Barclays Capital.
"Expectations for further Fed rate cuts as well as concerns
about the broader macro-economy and the dollar failing to
convincingly halt its decline should underpin prices," she said.
In other bullion markets, U.S. April gold futures <GCJ8>
rose $10.8 an ounce to $901.10 in electronic trade.
"There has been a good clean-out of the weak longs in recent
days and profit-taking after all the South African and Chinese
production problems. I see limited downside in the short term,"
said David Thurtell, metals analyst at BNP Paribas.
"Gold is getting some safe-haven flows as the equity market
outlook is very poor."
European stocks extended their gains around midday as
banking and mining stocks trimmed early losses and helped the
market bounce back after the previous session's sharp decline.
Miners were mainly negative though investors were torn
between concern that BHP Billiton's <BLT.L> monster $147 billion
bid for rival Rio would succeed and hope that persistent talk of
a bid for Xstrata <XTA.L> from Brazil's Vale <VALE5.SA> would
lead to a deal.
Palladium <XPD=> rose to $413/418 from $411/415 an ounce,
but was off Tuesday's six-year high of $427. Silver <XAG=>
gained to $16.44/16.49 an ounce from $16.32/16.37 in New York.
(Reporting by Atul Prakash; editing by Michael Roddy)
