(Updates with quotes, prices)
By Atul Prakash
LONDON, Feb 4 (Reuters) - Platinum roared to a record high
and palladium hit a six-year peak on Monday as supply concerns
persisted in top producer South Africa due to an electricity
crisis, analysts said.
But gold and silver slipped after setting new peaks on
Friday. Analysts said the metals were consolidating gains before
starting their march again to scale new highs.
South African mines that produce four-fifths of the world's
platinum made slow progress in bringing back production after
the state power firm allowed them only limited increases to
their electricity consumption. []
"The platinum price has been driven to record levels by the
problems with flooding and power shortages in South Africa. This
has seen strong investor buying," Tom Kendall, precious metals
strategist at Mitsubishi Corporation, said.
"Although 90 percent of power has been restored to the
mines, the impact on production has yet to be fully determined.
That said, the price is due for a correction from current
inflated levels and with most Chinese buyers on holiday, any
correction may be steep."
Platinum <XPT=> hit a high of $1,789 an ounce before easing
to $1,786/1,791 at 1542 GMT, against $1,752/1,759 late in New
York on Friday. Palladium <XPD=> rose as high as $420.50 and was
last at $420/423 an ounce, versus $410/413, tracking platinum.
The benchmark platinum futures contract <0#JPL:> on the
Tokyo Commodity Exchange also touched a record high of 5,870 yen
per gram. It ended at 5,868 yen, up 187 yen from Friday's close.
Platinum and palladium are used in jewellery and in vehicle
catalysts, where they help clean exhaust gases.
"Despite the relatively quick restoration of at least some
production, one should not underestimate the production loss and
its implications on this year's supply-demand balance," Wolfgang
Wrzesniok-Rossbach, head of sales at Germany's Heraeus, said.
With a loss of around 15,000 ounces a day due to the power
cut and another 50,000-70,000 ounces due to flooding at one of
the mines of Anglo Platinum, a total of 150,000 ounces might
have been lost. As a result, the annual deficit could climb this
year above 400,000 ounces -- the highest in 6 years, he said.
GOLD, SILVER SLIP
Gold fell more than 2 percent to its lowest level in nearly
two weeks on profit-taking and technical selling.
"It's Chinese New Year. A lot of the Far Eastern speculators
have closed down their long positions and taken money to go and
celebrate," said Tony Dobra, precious metals trader at Standard
Chartered Bank.
"While a lot of Asia will be on holiday, we may well see it
drift down towards $850. There is a some technical selling also
and the lower we go, more technical selling will come in."
Spot gold <XAU=> fell as low as $891.65, the lowest since
Jan. 24, before paring losses. The metal was last quoted at
$896.70/897.60, still down from $910.00/910.75 late in New York.
In other bullion markets, U.S. February gold futures <GCG8>
fell $12.3 an ounce to $901.30 in electronic trade.
"It looks like longs in gold are taking profits. People are
also shifting money into palladium and platinum at the moment,"
said Michael Blumenroth, a trader at Deutsche Bank.
Despite a sell-off, the market remained convinced that the
metal might advance well beyond Friday's record high of $936.50
an ounce during 2008.
"We have increased our gold price forecast to $890/oz from
$840 due to an increasingly favourable price environment
evolving for gold, supported by both supply and demand dynamics,
external drivers and a positive technical perspective," Barclays
Capital said in a market report.
"Recessionary fears, inflation concerns, Fed rate easing,
dollar weakness and geopolitical tensions are some of the
factors that have the potential to drive gold prices onwards and
upwards towards $1,000/oz in the months ahead."
Investors kept a close eye on the dollar, which eased
against the euro after falling to near-record lows on Friday.
Gold often moves in the opposite direction of the dollar.
Silver <XAG=> fell to $16.60/16.65 from $16.75/16.80 an
ounce on Friday, when it hit a 27-year high of $17.27.
(Reporting by Atul Prakash; editing by Peter Blackburn)
