(Updates with quotes, prices)
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, up more than 8
percent since tumbling to a three-week low around $850 this
week. The metal was at $915.20/916.10 at 1529 GMT, against
$907.00/907.70 in New York late on Thursday.
Spot platinum <XPT=> hit a lifetime high of $1,697 an ounce.
"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 jumped above $91 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, or
5.7 percent, to $1,697, before dipping to $1,685/1,690 an ounce,
versus $1,606/1,611 in New York.
"In platinum, you have a lot of demand and a lot of
potential demand in case oil stays high and diesel (vehicles)
become a success in the U.S.," said Wolfgang Wrzesniok-Rossbach,
head of marketing and sales at Germany's Heraeus, said.
"And you have all these disruptions on the supply side.
There are no big stocks and no alternative producers."
Platinum is mainly used in diesel catalytic converters.
The world's No. 1 platinum producer, Anglo Platinum
<AMSJ.J>, shut production at all its South African mines to
reduce electricity consumption. The company, accounting for 40
percent of world supplies, is expected to lose 9,000 refined
platinum ounces output a day.
The world's second-biggest platinum miner, Impala Platinum
<IMPJ.J>, also stopped operations at its largest mine near
Rustenburg and was expected to lose 3,500 ounces a day.
On Thursday, Lonmin, the world's No. 3 producer, cut its
sales outlook for the year after first-quarter platinum output
slid by a fifth on safety shutdowns and processing problems.
Silver <XAG=> hit a 27-year high of $16.61 an ounce before
falling to $16.33/16.38, against $16.35/16.40 in New York.
Palladium <XPD=> rose to a 20-month high of $387.50 before
falling to $378.50/383.50, versus $370.50/375.50 an ounce.
(Additional reporting by Veronica Brown in London and Lewa
Pardomuan in Singapore)
(Editing by Michael Roddy)
