(Updates with New York closing prices, market activity)
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 2 percent to trade above $900 an ounce and silver
gradually moving towards recent 27-year highs.
Spot platinum <XPT=> rose as high as $1,819 and was quoted
at $1,810/1,815 an ounce, against $1,770/1,775 late in New York
on Tuesday.
The active U.S. NYMEX platinum contract for April delivery
<PLJ8> settled up $33.50 or 1.9 percent at $1,819.00 an ounce,
after rising to a record peak of $1,822.60.
"It's the fundamentals capturing speculators' attention.
Basically, there's not a lot of platinum around and no one wants
to sell," said David Holmes, director of precious metals sales
at Dresdner Kleinwort Investment bank.
"Once a metal is in play, upside potential is hard to call,
but $2,000 is within reach," he added.
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 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," said
Tom Kendall, metals strategist at Mitsubishi Corporation.
"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.
"They can talk about the American recession all they want.
The only time I think these prices are going to come down is by
a wave of profit taking. The South African problem is going to
stay with us for a while," said Ralph D'Esposito, a floor
trader with RJ Futures in New York.
GOLD BACK TO $900
Gold bounced back above $900 an ounce as recent drops
attracted physical buyers and bargain hunters, analysts said.
Spot gold <XAU=> rose as high as $907.20 an ounce and was
at $903.10/903.8 by New York's last quote at 2:15 p.m. EST
(1915 GMT), against $886.85/887.55 late in New York on
Tuesday.
The COMEX April gold contract <GCJ8> finished up $14.70 or
1.7 percent at $905.00 an ounce.
Bullion rose to a record high of $936.50 on Feb.1.
Dealers said that buy-stops were triggered along higher
prices, and that new short positions were created in the
market.
They also said that long-term investors in gold
exchange-traded funds provided stabilization to the market in
spite of recent volatile bullion prices.
"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 rose as banking and mining stocks trimmed
early losses and helped the market bounce back after the
previous session's sharp decline. U.S. stocks were also
slightly higher by afternoon trade.
Miners lost ground, though investors were torn between
concern that BHP Billiton's <BLT.L> monster $147 billion bid for
rival Rio Tinto <RIO.AX> <RIO.L> would succeed and hope that
talk of a bid for Xstrata <XTA.L> from Brazil's Vale <VALE5.SA>
would lead to a deal.
Palladium <XPD=> rose to $416/421 from its previous close
of $411/415 an ounce, after reaching a six-year high of $426.50
on Tuesday. Silver <XAG=> gained to $16.47/16.52 an ounce from
$16.32/16.37 late in the U.S. market on Tuesday.
(Additional reporting by Frank Tang in New York, Veronica Brown
in London, editing by Matthew Lewis)
