(Updates with closing prices, market activity, adds NEW YORK
to dateline)
By Frank Tang and Atul Prakash
NEW YORK/LONDON, Jan 25 (Reuters) - Gold and platinum
soared to historic highs on Friday amid a power crisis that
shut South African mines, firm oil prices 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 $913.00/914.00 by New York's last quote
at 2:15 p.m. EST (1915 GMT), against $907.00/907.70 in New York
late on Thursday.
The active gold contract for February delivery at the COMEX
division of the NYMEX <GCG8> closed up $4.90 at $910.70 an
ounce.
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.
U.S. crude futures <CLc1> finished up $1.30 at $90.71 a
barrel.
STRONGEST QUARTER
"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.," he
added.
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.
In other metals, platinum <XPT=> had surged as much as $90,
or 5.7 percent, to $1,697, before dipping to $1,671.50/1,676.50
an ounce, versus $1,606/1,611 late in New York on Thursday.
The active NYMEX platinum contract for April delivery
<PLJ8> finished $67.10, or 4.2 percent, higher at $1,680.10 an
ounce, which marked the biggest one-day percentage gain since
August.
"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.
Ralph D'Esposito, NYMEX platinum group metals floor trader,
said that the latest work stoppage and possible further labor
actions and strikes in South African mines could lead to a
major shortfall in platinum supplies, which is a bullish sign
for prices.
However, D'Esposito said that platinum's rally was mainly
fueled by buying from commodity funds and that support from
banks and commission houses was largely absent. He cautioned
that a pullback of $30 to $40 could be possible.
Mine supply of platinum has been beset with supply problems
due largely to mine closures and industrial action resulting
from accidents in top global producer South Africa.
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 $16.44/16.49, against $16.35/16.40, its previous
close in New York. Palladium <XPD=> rose to a 20-month high of
$387.50 before falling to $378.00/383.00, versus its Thursday
close of $370.50/375.50 an ounce.
(Additional reporting by Veronica Brown in London and Lewa
Pardomuan in Singapore)
