(Recasts, updates prices, market activity to U.S. close; adds
second byline, new dateline, previously LODNON)
By Frank Tang and Atul Prakash
NEW YORK/LONDON, Feb 12 (Reuters) - Gold fell on Tuesday as
a trade group in India said demand for bullion in the top
consuming country fell sharply in January due to record high
prices.
Platinum fell after eight straight sessions of rising near
the historic $2,000 mark.
India's Bombay Bullion Association said gold imports in
January slumped to five tonnes from 62 tonnes a year earlier,
as higher prices sapped demand.
George Nickas, broker with FC Stone in New York, said
sharply reduced gold jewelry demand from India would weigh on
bullion, although the market could be sustained by investors
buying gold as a safe-haven investment.
"People who are buying gold are the high net-worth
individuals, and people who are selling it are people who are
trying to survive the (weaker) economy. It's unclear where gold
is going to go in the near term," Nickas said.
Gold <XAU=> fell to $907.70/908.50 by New York's last quote
at 2:15 p.m. EST (1915 GMT) from $922.70/923.40 the previous
day. It traded as high as $924.60 during the session.
The gold contract for April delivery at the COMEX division
of the NYMEX <GCJ8> saw losses accelerate and settled down
$15.60 or 1.7 percent at $911.10 an ounce.
Weaker crude oil prices dented bullion's appeal as a hedge
against inflation on Tuesday, and the dollar's decline against
the euro failed to boost gold futures.
But news of lower gold supply because of mining operation
issues in top producer South Africa supported the gold market.
South African gold output fell 6.5 percent in 2007 compared
with 2006 in volume terms, while total mineral production fell
0.2 percent from the previous year, official data showed on
Tuesday. []
Fortis Bank Global Markets in London told clients in a note
that the market now expected much-reduced South African
production this year as that country's power problem persisted.
The bank said it forecast a continued price increase in gold
with occasional corrections due to profit taking.
Suresh Hundia, president of the Bombay Bullion Association,
told Reuters that "there is almost zero demand. From 62 tonnes
gold imports in January last year, only five tonnes were
brought from overseas in January 2008."
"At these rates, there is no possibility of imports,"
Hundia said. []
PLATINUM TAKES BREATHER
Platinum finished lower as investors locked in profits
after the metal set a record high for the ninth straight
trading day.
Platinum <XPT=> was at $1,910/1,915, against $1,933/1,941
in New York late on Monday. In overnight trade, the white metal
had risen to a high of $1,965 an ounce.
"You know that platinum demand is increasing on the back of
emission controls and you know that supplies are going to be
squeezed. So it just makes sense to be long in this market,"
said Johannesburg-based Walter De Wet, analyst at Standard
Bank.
Platinum prices have surged 30 percent in three weeks. The
rally stayed alive on Monday after Anglo Platinum <AMSJ.J>, the
world's biggest producer, said the power problem had cost
30,000 ounces in lost output so far in 2008, and would cut
output as much as 120,000 ounces for the full year.
The market nervously awaits financial results of Impala
Platinum <IMPJ.J>, the world's No. 2 producer of the metal, on
Thursday for more cues on total production losses.
Negotiations were underway for South African state-owned
power utility Eskom to buy surplus electricity from local
producers as part of its bid to solve the nation's energy
crisis, Public Enterprises Minister Alec Erwin said on Monday.
A spokesman at Eskom said the company was in discussions
with the government to ensure sufficient funding to meet its
expansion programme. []
Palladium <XPD=> hit a six-year high of $447 an ounce
before falling to $434/437, against New York's $437/440. Silver
<XAG=> jumped to a 27-year high of $17.60 an ounce before
falling to $17.12/17.17, against its Tuesday finish of
$17.47/17.52 in New York.
(Additional reporting by Lewa Pardomuan in Singapore and
Biman Mukherji in New Delhi; Editing by David Gregorio)
(Editing by David Gregorio)
