By Atul Prakash
Platinum hit an historic high on
Wednesday as the market remained concerned about
supplies from top producer South Africa following a
power crisis that has hit mining operations there.
Other precious metals also advanced, with gold rising
more than 2 percent to trade above $900 an ounce and
silver gradually moving towards recent 27-year highs.
Spot platinum XPT=> rose as high as $1,819 and was
quoted at $1,810/1,815 an ounce, against $1,770/1,775
late in New York on Tuesday.
The active U.S. NYMEX platinum contract for April
delivery PLJ8> settled up $33.50 or 1.9 percent at
$1,819.00 an ounce, after rising to a record peak of
"It's the fundamentals capturing speculators'
attention. Basically, there's not a lot of platinum
around and no one wants to sell," said David Holmes,
director of precious metals sales at Dresdner
Kleinwort Investment bank.
"Once a metal is in play, upside potential is hard to
call, but $2,000 is within reach," he added.
South Africa's government appealed to mining firms
for help in cutting power consumption on Tuesday to
ease a power crisis caused by the failure of
electricity generation to match economic growth.
"The lack of spare power generating capacity in South
Africa is not only affecting output in the short term
but has the potential to delay new projects by months
or even years," said Tom Kendall, metals strategist
at Mitsubishi Corporation.
"Speculators have got this platinum bull by the horns
and could easily drive the price towards $1,900. The
market will remain very volatile at least until Anglo
Platinum and Impala have released financial
statements next week."
He said the platinum market was likely to see a
deficit of at least 350,000 ounces this year and
perhaps much more on top of last year's 375,000
"They can talk about the American recession all they
want. The only time I think these prices are going to
come down is by a wave of profit taking. The South
African problem is going to stay with us for a
while," said Ralph D'Esposito, a floor trader with RJ
Futures in New York.
GOLD BACK TO $900
Gold bounced back above $900 an ounce as recent drops
attracted physical buyers and bargain hunters,
Spot gold XAU=> rose as high as $907.20 an ounce and
was at $903.10/903.8 by New York's last quote at 2:15
p.m. EST (1915 GMT), against $886.85/887.55 late in
New York on Tuesday.
The COMEX April gold contract GCJ8> finished up
$14.70 or 1.7 percent at $905.00 an ounce.
Bullion rose to a record high of $936.50 on Feb.1.
Dealers said that buy-stops were triggered along
higher prices, and that new short positions were
created in the market.
They also said that long-term investors in gold
exchange-traded funds provided stabilization to the
market in spite of recent volatile bullion prices.
"There has been a good clean-out of the weak longs in
recent days and profit-taking after all the South
African and Chinese production problems. I see
limited downside in the short term," said David
Thurtell, metals analyst at BNP Paribas.
"Gold is getting some safe-haven flows as the equity
market outlook is very poor."
European stocks rose as banking and mining stocks
trimmed early losses and helped the market bounce
back after the previous session's sharp decline. U.S.
stocks were also slightly higher by afternoon trade.
Miners lost ground, though investors were torn
between concern that BHP Billiton's monster $147
billion bid for rival Rio Tinto would succeed and
hope that talk of a bid for Xstrata from Brazil's
Vale would lead to a deal.
Palladium XPD=> rose to $416/421 from its previous
close of $411/415 an ounce, after reaching a six-year
high of $426.50 on Tuesday. Silver XAG=> gained to
$16.47/16.52 an ounce from $16.32/16.37 late in the
U.S. market on Tuesday.