* Platinum rises on South African strike amid Lonmin bid
* Gold ticks up on bargain hunting after three-day fall
(Recasts, adds analyst comments, closing prices, adds NEW YORK
to dateline)
By Frank Tang and Jan Harvey
NEW YORK/LONDON, Aug 6 (Reuters) - Platinum rose by as much
as 4 percent and palladium more than 7 percent on Wednesday as
strike action in South Africa fueled supply fears, and as
Xstrata's $10 billion bid for Lonmin also boosted confidence in
the market.
The rise breaks a sharp fall in platinum prices, which
tumbled more than 10 percent in the last three days on fears
over falling demand for the metal from carmakers.
Spot platinum <XPT=> hit a high of $1,629.00 an ounce before
easing to $1,594.50/1,614.50 by New York's last trade, against
its Tuesday close of $1,563.00/1,583.00.
Sister-metal palladium <XPD=> rose to a session high of
$371.00 an ounce, before ending at $349.50/357.50 against
$346.00/354.00 in New York.
South Africa, source of four out of five ounces of the
world's platinum, was hit by strike action on Wednesday which
shut mines and factories. []
"It is only a one-day strike, but it has probably reminded
people that supply is very concentrated on South Africa," said
VM Group analyst Matthew Turner. "Any problems there will
immediately affect the market."
The platinum-to-gold ratio dropped to 1.7 on Tuesday, a
level it has not breached in the last three years, Turner
added.
Momentum in the platinum market also received a hoist
following Anglo-Swiss miner Xstrata's <XTA.L> $10 billion bid
for the world's third-biggest platinum producer, Lonmin <LMI.L>.
[]
"Platinum has been buoyed by interest in the sector (linked
to) Xstrata's bid for Lonmin," Commerzbank trader Rory McVeigh
told Reuters. "It shows a more positive view of the platinum
situation in South Africa."
Greg Orrell, president of the $170 million Orrell Capital in
California, said that Xstrata's bid was the most logical choice
for Xstrata to enter the platinum arena as there was a lack of
large platinum producers.
Caesar Bryan, portfolio manager of the $500 million GAMCO
Gold Fund in New York, said he expected to see more
consolidation in the mining industry, especially for the
acquisitions of smaller miners.
"Their share prices are badly hit because investors are
taking flight at the prospect of companies needing to raise
money to bring a project into production," Bryan said.
Bryan said that, however, larger miners could focus on the
mid-cap companies instead, as they were cautious about getting
bogged down with running too many small operations.
In other company news, an officer of Anglo American Plc
<AAL.L> said strong demand for platinum, used in car
manufacturing, was leading to a supply shortfall. []
GOLD TICKS UP
Meanwhile, gold ended slightly higher as investors took
advantage of a three-day fall in prices to buy below the key
$900 an ounce support level.
The market was cheered by the Federal Reserve's intimation,
after it left interest rates on hold at 2 percent late Tuesday,
that it is in no hurry to hike rates. []
In industry news, the world's No. 3 gold miner Anglogold
Ashanti <ANGJ.J> said it expected to achieve only about 80
percent of spot gold prices this year despite years of work on
its hedge book. []
The precious metal slipped more than $20 an ounce on Tuesday
as part of a broader sell-off of commodities, led by crude oil.
There are signs that investment demand may be softening.
The largest gold-backed exchange traded fund, New York's
SPDR Gold Trust <GLD>, said its gold holdings fell 15 tonnes or
2.3 percent on Tuesday to a one-month low of 659.31 tonnes.
Gold <XAU=> was at $878.70/879.90 an ounce by New York's
last trade, up from $876.35/877.95 late in New York on Tuesday,
while silver <XAG=> climbed to $16.56/16.61 an ounce from
$16.45/16.53 late in New York.
U.S. COMEX December gold <GCZ8>, however, settled down $3.10
at $883.00 an ounce at the New York Mercantile Exchange.
(Editing by Matthew Lewis)
