(Recasts, updates prices, market activity; adds second byline,
dateline, previously LONDON)
By Carole Vaporean and Pratima Desai
NEW YORK/LONDON, March 4 (Reuters) - Gold bullion prices fell more than 2 percent by midday in New York on Tuesday,
reversing hefty gains earlier in the session as declining crude
oil prices pulled precious metals off their lofty levels.
Spot gold <XAU=> fell to $960.75 a troy ounce after a slide
in oil prices, traders said. Gold later bounced to around
$961.10/961.80 an ounce compared with $981.20/982.00 late in
New York on Monday, when it touched a record high of $989.30.
Platinum hit record highs on Tuesday as speculators bought
on worries over supplies. It fell off session highs later,
along with other precious metals, but remained up on the day.
Spot platinum <XPT=> hit a session high of $2,290 an ounce
before falling to $2,235/2,245 by 1:25 p.m. EST (1825 GMT), up
from $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."
When oil futures tumbled by more than $3 after hitting a
record the previous day, precious metals prices across the
board slid also. U.S. crude oil futures fell amid weak equities
and expectations of increased energy inventories. Some in the
market also feared that OPEC would decide at a meeting on
Wednesday to keep output steady instead of raising it.
Among precious metals, platinum held its ground. Platinum,
used in jewelry and auto catalysts to clean exhaust fumes, has
risen nearly 50 percent this year as a power crisis disrupted
mining in main producer South Africa and raised supply fears.
"Platinum has got limited downside. The weak longs have
been cleaned out," said David Thurtell, metals analyst at BNP
Paribas, adding that supply concerns should keep it supported.
Despite gold's downturn, analysts said they still see scope
to the upside, noting that the dollar remains on the defensive
as players anticipate more U.S. interest rate cuts by the
Federal Reserve to stave off possible economic recession.
"$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
The dollar was trading near record lows against the euro
and analysts think further losses are likely if the Fed
aggressively cuts rates at its March 18 meeting.
Spot palladium <XPD=> rose as high as $590 an ounce, its
highest in more than six years and was last at $550/555, down
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 jewelry 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=> slipped to $19.72/19.77 an ounce after rising
to a high of $20.55, versus $20.27/20.32 In New York. It
reached a 27-year peak of $20.60 an ounce on Monday.
(Additional reporting by Atul Prakash in London; Editing by
David Gregorio)
