(Recasts, adds quotes, changes prices, pvs SINGAPORE)
By Atul Prakash
LONDON, Jan 25 (Reuters) - Gold and platinum soared to
historic highs on Friday after a power crisis shut South African
mines, with a further lift coming from firm oil and expectations
of more U.S. rate cuts.
South Africa's three top gold producers and the world's
biggest platinum miner suspended production at all their mines
in the country due to a power crisis. []
Gold <XAU=> hit a high of $923.40 an ounce, surpassing last
week's record and up more than 8 percent since tumbling to a
three-week low around $850 this week. Gold was at $921.80/922.50
by 1136 GMT, against $907.00/907.70 in New York late on
Thursday.
"Energy is the lifeblood to keep these mines going. South
African production is in terminal decline, notwithstanding the
five-year bull run in metals, and these outages can only further
accelerate their declining position," Ross Norman, managing
director at TheBullionDesk.com, said.
"We hold with our view that gold will hit a high of $1,250
this year," he said.
Gold, traditionally seen as a safe-haven asset and a hedge
against oil-led inflation, was also supported by strong oil
prices and nervousness in global financial and credit markets.
Oil rose above $90 a barrel, building on earlier gains.
Bullion investors kept a close eye on the dollar.
Despite the dollar's marginal gain against the euro, it was
seen staying on the back foot in the lead-up to next week's U.S.
Federal Reserve meeting, where markets have priced in the risk
for a further 50 basis point cut in the 3.5 percent rate.
The Fed slashed interest rates by 75 basis points earlier
this week in an emergency bid to head off a U.S. recession and
halt a global rout in stocks.
STRONGEST QUARTER
A rate cut is often seen as a negative factor for the dollar
and investors look for other alternative assets, including gold.
Bullion generally moves in the opposite direction of the dollar.
"Gold's strongest quarter is going to be the first quarter
and we are going to see lower prices later in the year," said
David Holmes, director of metals sales at Dresdner Kleinwort.
"Gold is very much in the headline and there are a lot of
supporting factors, including a weak dollar, the stock market
turbulence and the possibility of inflation in the U.S."
Other bullion markets also surged. Trading in Tokyo's gold
and platinum futures <0#JAU:> <0#JPL:> ended after they rose to
their daily limit of 120 yen per gram.
U.S. gold futures extended gains, with the most active
February contract <GCG8> hitting a record $924.30 an ounce.
In other metals, platinum <XPT=> surged more than $90 an
ounce, or 5.7 percent, to hit a lifetime high of $1,697, before
easing to $1,687.50/1,692.50, versus $1,606/1,611 in New York.
"The demand for platinum is pretty inelastic. You can't sell
a car without a catalytic converter. We are in a situation where
the deficit is back," Holmes said, referring to supply problems.
The world's No. 1 platinum producer, Anglo Platinum
<AMSJ.J>, also said it had shut production at all its South
African mines to reduce electricity consumption.
Angloplat, which accounts for 40 percent of world supplies
of the metal used for jewellery and cleaning car exhausts, is
expected to lose 9,000 refined platinum ounces output a day.
The world's second-biggest platinum miner, Impala Platinum
<IMPJ.J>, also said it had stopped operations at its largest
mine near Rustenburg and expected to lose 3,500 ounces of
refined platinum a day after the halt.
On Thursday, Lonmin, the world's No. 3 platinum producer,
cut its sales outlook for the year after first-quarter refined
platinum output slid by nearly a fifth due to safety shutdowns
and persistent processing problems.[]
Silver <XAG=> hit a high of $16.61 an ounce, its best level
since December 1980, up from $16.35/16.40 in New York. Palladium
<XPD=> rose to a 20-month high of $387.50 before falling to
$378/383, versus $370.50/375.50 an ounce in New York.
(Additional reporting by Veronica Brown in London and Lewa
Pardomuan in Singapore)
(Editing by Michael Roddy)
