(Recasts, updates prices, market activity; updates byline,
dateline, previously LONDON)
By Carole Vaporean
NEW YORK, March 4 (Reuters) - Gold bullion prices fell more
than 2 percent on Tuesday, reversing hefty gains earlier in the
session as declining crude oil prices pulled precious metals
off their lofty levels.
Spot gold <XAU=> trimmed midday declines to $961.20 an
ounce, but remained sharply lower by late afternoon. It was
quoted at $963.10/963.90 a troy ounce, down from $981.20/982.00
on Monday, when it touched a record high of $989.30.
Gold futures for April delivery <GCJ8> on the COMEX
division of the New York Mercantile Exchange dropped $17.90 to
finish at $966.30 an ounce after reaching a session high of
$990.30. On Monday, it soared to a record high at $992.00.
Platinum hit record highs on Tuesday as speculators bought
on worries over supplies. It fell off session highs later, on
news that South Africa on Wednesday might announce ways to ease
the impact of job losses in the mining industry.
A mining official also said it would try to restore some
power to South Africa's mining industry, which had 90 percent
of its normal load rationed by the state utility. []
The active NYMEX platinum contract for April delivery
<PLJ8> finished with $25.40 gains at $2,267.0 an ounce.
Earlier, it set a record high of $2,308.80 on supply fears.
Spot platinum <XPT=> fetched $2,220/2,230 late Tuesday.
"South African mines might get some back power, at least
there will discussions on Wednesday to see how mines might get
power, which would put mines back online, meaning more supply
in the market," said one platinum dealer.
Other analysts pointed out however, that inventories remain
low and fully restoring power to the mines could take years.
"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.
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.
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 $545/550, 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.
Spot silver <XAG=> slid to $19.71/19.76 from $20.27/20.32
at Monday's close. London silver was fixed at $20.32 an ounce.
It reached a 27-year peak of $20.60 an ounce on Monday.
(Additional reporting by Pratima Desai and Atul Prakash in
London; Editing by David Gregorio)
