(Updates with quotes, prices)
By Atul Prakash
LONDON, Feb 5 (Reuters) - Platinum hit a record high above
$1,800 on Tuesday on supply concerns, but later lost steam as a
dollar rise triggered profit-taking and dragged down prices as
much as 1.7 percent.
Palladium also fell after rising to its highest in six
years, gold slipped to a two-week low after setting historic
highs last week and silver fell more than 2 percent.
"As platinum moved above $1,800 an ounce, some people
started taking profits. The market was a little bit overbought
today and you just see a consolidation at the moment," Michael
Widmer, metals analyst at Lehman Brothers, said.
"But fundamentals are still very strong. We are going to
have a deficit on the platinum market this year, with shortfalls
of around 200,000 ounces by the end of the year.
"I wouldn't be too concerned about the price fall today and
still think that $2,000 is a realistic target."
Platinum <XPT=> rose to $1,809 an ounce before falling to
$1,763/1,768, down from $1,790/1,800 late in New York on Monday.
Analysts said a rise in the dollar also made the upward move
in precious metals prices difficult.
The dollar sharply rose against the euro after surprisingly
weak euro zone service sector data, but later pared gains on a
report that showed a sharp drop in activity in the U.S. service
sector in January.
The fall in the index reignited fears the U.S. economy is
slowing down despite a series of rate cuts to revive growth.
A firmer dollar makes precious metals costlier for holders
of other currencies and often lowers demand.
"Platinum is also being dragged down by gold, which has
fallen quite sharply mainly on the dollar," said Stephen Briggs,
economist at SG Corporate and Investment Banking.
"But at any time, we could have power problems re-emerge in
South Africa. A lot of analysts are rejigging their production
numbers and the market is re-pricing for this risk.""
Analysts said the worst was far from over for South African
mines, which produce four-fifths of the world's platinum, after
state power firm Eskom allowed them only limited increases in
their electricity consumption.
"Ongoing power problems in South Africa indicate further
production problems in this already tight market," Fairfax said
in a daily metals note.
Platinum and palladium are used in jewellery and in vehicle
catalysts, where they help clean exhaust gases.
GOLD STRUGGLES
Gold remained under pressure after Friday's rally to a
record high of $936.50 an ounce induced profit taking, but some
dealers said the metal was still on track to touch new highs due
to uncertainties in the dollar's outlook.
Spot gold <XAU=> fell as low as $885.30 and was last quoted
at $890.50/891.40, against $904.40/905.10 in New York.
"I am not surprised by the profit taking. Overall we are
going to have rising prices as the upward move in gold is not
over yet," said Widmer of Lehman Brothers.
Gold has gone up by as much as 12 percent this year, and
physical dealers expect buying on dips from jewellers to
persist, though trading has begun to slow down in Asia ahead of
this week's Lunar New Year celebration.
London-based consultancy GFMS said on Monday that the price
of gold is likely to peak at just over $1,000 per ounce in 2008
and benefit from any weakening of the U.S. economy as investors
seek new havens for their funds, []
Silver <XAG=> fell to $16.40/16.45 from $16.69/16.74 an
ounce, while palladium jumped as high as $426.50 before slipping
to $411/415, versus $423/428 late in the U.S. market.
(Additional reporting by Lewa Pardomuan in Singapore)
(Reporting by Atul Prakash; editing by Michael Roddy)
