By Pratima Desai
LONDON, March 4 (Reuters) - Platinum hit record highs on
Tuesday as speculators bought on worries over supplies, while
gold consolidated recent gains before making a stab at the key
$1,000-an-ounce level.
Spot platinum <XPT=> hit a session high of $2,290 an ounce
and was at $2,270/2,280 by 1458 GMT, compared with $2,230/2,237
late in New York on Monday.
"Platinum is very strong, inventories are low, fundamentals
are very supportive," said Suki Cooper, analyst at Barclays
Capital. She added that the global deficit this year could be up
to 600,000 ounces.
"Given the strength of investment demand this year, the
platinum deficit could be greater than that."
Platinum, used in jewellery and auto catalysts to clean
exhaust fumes, has risen nearly 50 percent this year as a power
crisis which has disrupted mining in main producer South
Africa sparked supply fears.
David Thurtell, metals analyst at BNP Paribas, said supply
concerns and weaker dollar had been supporting the market. He
said that price dips would attract buyers.
"Platinum has got limited downside. The weak longs have been
cleaned out," he added.
Gold <XAU=> hit a bid high of $987.90 a troy ounce and was
at $983.10/983.90, up from $981.20/982.00 late on Monday when it
touched a record high of $989.30.
"$1,000 seems likely in the near term, with global inflation
expectations being fuelled by the current commodity bull run,"
Standard Bank said in a note.
The precious metal has gained nearly 50 percent since the
credit market crisis triggered buying from investors looking for
a haven from financial market uncertainty.
SWITCHES
Another significant reason behind gold purchases has been
the falling U.S. currency against the world's major currencies
which makes dollar-denominated metals cheaper for investors in
other currencies.
The dollar was trading near record lows against the euro and
analysts think further losses are likely if as is widely
expected the U.S. Federal Reserve cuts rates aggressively at its
March 18 meeting.
"We believe $1,000 is on the cards. The dollar is weak, the
Fed is easing and inflation fears are very supportive," Cooper
said. "The environment is positive."
Investors also use gold as a hedge against inflation, which
is often triggered by rising commodity prices, specifically oil
<CLc1> which on Monday hit a record high of $103.95 a barrel on
growing fears that OPEC will not increase supplies.
Spot palladium <XPD=> rose as high as $590 an ounce, its
highest in more than six years and was last at $583/587, up from
$576/580 on Monday.
"We have heard commentators talk about switching from
platinum to palladium in industrial applications, which we
believe to be erroneous, at least for the next few years," UBS
said in a recent note.
"While jewellery demand for palladium may improve, there is
no physical scarcity of palladium and very little chance that we
will run out of the metal."
Silver <XAG=> tracking gold was at $20.36/20.41 an ounce,
versus $20.27/20.32, having reached a 27-year peak of $20.60 an
ounce on Monday.
(Additional reporting by Atul Prakash in London)
(Reporting by Pratima Desai; editing by Michael Roddy)
