(Updates with New York closing prices, market activity)
By Atul Prakash
LONDON, Feb 4 (Reuters) - Platinum roared to a record high
and palladium hit a six-year peak on Monday as supply concerns
persisted in top producer South Africa due to an electricity
crisis, analysts said.
But gold and silver slipped after setting new peaks on
Friday. Analysts said the metals were consolidating gains
before starting their march again to scale new highs.
South African mines that produce four-fifths of the world's
platinum made slow progress in bringing back production after
the state power firm allowed them only limited increases to
their electricity consumption. []
"The platinum price has been driven to record levels by the
problems with flooding and power shortages in South Africa.
This has seen strong investor buying," Tom Kendall, precious
metals strategist at Mitsubishi Corporation, said.
"Although 90 percent of power has been restored to the
mines, the impact on production has yet to be fully determined.
That said, the price is due for a correction from current
inflated levels and with most Chinese buyers on holiday, any
correction may be steep."
Platinum <XPT=> hit a high of $1,790 an ounce and was
quoted at $1,790/1,800 at 2:37 p.m. EST (1937 GMT), against
$1,752/1,759 late in New York on Friday. Palladium <XPD=> rose
as high as $423 and was last at $423/428 an ounce, versus its
previous finish of $410/413, tracking platinum.
U.S. platinum contracts scaled a fresh record high above
$1,800 an ounce in after-hours trade as mining operation in top
producer South Africa continued to struggle due to a power
crisis.
Meanwhile, the benchmark platinum futures contract <0#JPL:>
on the Tokyo Commodity Exchange also touched a record high of
5,870 yen per gram. It ended at 5,868 yen, up 187 yen from
Friday's close.
Platinum and palladium are used in jewellery and in vehicle
catalysts, where they help clean exhaust gases.
"Despite the relatively quick restoration of at least some
production, one should not underestimate the production loss
and its implications on this year's supply-demand balance,"
Wolfgang Wrzesniok-Rossbach, head of sales at Germany's
Heraeus, said.
With a loss of around 15,000 ounces a day due to the power
cut and another 50,000-70,000 ounces due to flooding at one of
the mines of Anglo Platinum, a total of 150,000 ounces might
have been lost. As a result, the annual deficit could climb
this year above 400,000 ounces -- the highest in 6 years, he
said.
GOLD, SILVER SLIP
Gold fell more than 2 percent to its lowest level in nearly
two weeks on profit-taking and technical selling.
"It's Chinese New Year. A lot of the Far Eastern
speculators have closed down their long positions and taken
money to go and celebrate," said Tony Dobra, precious metals
trader at Standard Chartered Bank.
"While a lot of Asia will be on holiday, we may well see it
drift down towards $850. There is a some technical selling also
and the lower we go, more technical selling will come in."
Spot gold <XAU=> fell as low as $891.65, the lowest since
Jan. 24, before paring losses. The metal traded at
$904.40/905.10 by New York's last quote at 2:15 p.m., still
down from $910.00/910.75 late in New York on Friday.
The gold contract for April delivery at the COMEX division
of the NYMEX <GCJ8> settled down $4.10 at $909.40 an ounce.
"It looks like longs in gold are taking profits. People are
also shifting money into palladium and platinum at the moment,"
said Michael Blumenroth, a trader at Deutsche Bank.
Despite a sell-off, the market remained convinced that the
metal might advance well beyond Friday's record high of $936.50
an ounce during 2008.
"We have increased our gold price forecast to $890/oz from
$840 due to an increasingly favourable price environment
evolving for gold, supported by both supply and demand
dynamics, external drivers and a positive technical
perspective," Barclays Capital said in a market report.
Investors kept a close eye on the dollar, which eased
against the euro after falling to near-record lows on Friday.
Gold often moves in the opposite direction of the dollar.
Silver <XAG=> fell to $16.67/16.72 from $16.75/16.80 an
ounce on Friday, when it hit a 27-year high of $17.27.
(Additional reporting by Frank Tang in New York; Editing by
Marguerita Choy)
