(Recasts, adds quotes, changes prices, pvs SINGAPORE)
By Atul Prakash
LONDON, Jan 29 (Reuters) - Gold and platinum hit historic
highs for a third straight day on Tuesday and silver rallied to
a 27-year peak on expectations of more U.S. rate cuts and fears
about South African output.
Spot gold <XAU=> rose as high as $933.10 an ounce and was
quoted at $933.00/933.90 by 1122 GMT, against $927.50/928.20
late in New York on Monday. The metal has gained about 11
percent so far this year.
Platinum <XPT=> hit $1,735 an ounce as buying accelerated
after a power crisis forced miners in South Africa to stop
operations last week. Prices later eased on profit taking.
"Gold has been supported by a positive day for stock markets
in Asia and continuing problems in South Africa, but traders are
also keeping a close eye on the euro/dollar rate," Tom Kendall,
metals strategist at Mitsubishi Corporation, said.
"The market awaits U.S. economic data and the outcome of the
Fed meeting. Gold has already bounced $75 in just six days so it
would not be surprising to see a period of consolidation or
another short correction. But over the medium term, the bull
market trend remains very much in place."
The dollar steadied against a basket of major currencies,
with investors debating the likely size of a widely expected U.S.
Federal Reserve interest rate cut this week and the chances of a
U.S. recession.
The Fed lowered rates by 75 basis points last week, and is
expected to cut again by as much as 50 basis points when its
two-day scheduled meeting ends on Wednesday.
Weaker-than-expected U.S. housing data on Monday backed the case
for growth-boosting monetary easing.
A rate cut tends to weaken the dollar as investors look for
alternative assets, including gold, for better returns. Bullion
prices also often move in the opposite direction of the dollar.
"Ongoing power outages in South Africa, coupled with dollar
weakness, have triggered further investor and speculative
related buying in the precious metal," TheBullionDesk.com said.
"Short term, gold is vulnerable to pockets of profit taking.
However, given the concerns regarding the health of the U.S.
economy and the prospect of lower interest rates, dips will
continue to find good volumes of buying interest," it said in a
daily note.
SUPPLY CONCERNS
AngloGold Ashanti said on Tuesday it had restarted
production at one of its seven mines although a power crisis
remained largely unresolved. []
AngloGold's two main gold-producing rivals in South Africa
were still unable to produce at full capacity at any of their
mines, and said they hoped they could get more power.
South Africa accounts for about 10 percent of global gold
output and 80 percent of platinum production.
Gold also advanced in other bullion markets. The most active
February contract <GCG8> on U.S. gold futures hit another record
high at $930 an ounce before trimming gains.
The metal appeared strong on charts as well.
"Longer term, our outlook remains bullish. We maintain that
the recent move higher was confirmed by technical indicators and
as a consequence we still view corrective pullbacks will be
shallow and temporary," said Andy Hart, technical analyst at
Commerzbank.
"We reiterate that the market completed a bull flag pattern,
which offers an additional upside measured target towards $1,027
longer term," he said in a market report.
Spot platinum <XPT=> was last quoted at $1,724/1,728 an
ounce, against $1,720/1,725 late in New York. Silver <XAG=> rose
as high as $16.79/16.84, its best level since December 1980, to
track firm gold. It was last quoted at $16.67/16.72 in New York.
Palladium <XPD=> was at $386.50/390.50 an ounce after rising
to a 20-month high of $387, versus $384/388 late in New York.
(Additional reporting by Lewa Pardomuan in Singapore)
(Reporting by Atul Prakash; editing by Michael Roddy)
