(Updates with quotes, closing prices, market activity, adds
second byline, dateline, previously LONDON)
By Frank Tang and Atul Prakash
NEW YORK/LONDON, Feb 8 (Reuters) - Platinum scaled a record
peak for the seventh straight trading day on Friday, as
persistent supply concerns in top producer South Africa fed
worries about a huge market deficit this year.
Other precious metals advanced on bullish market sentiment
and a jump of nearly $4 in crude oil prices. Gold rose more
than 1 percent toward its historic high of $936.50 an ounce and
palladium hitting a six-year peak.
Spot platinum <XPT=> rose as high as $1,880 an ounce and
was quoted at $1,873/1,883 at 1605 GMT, against $1,841/1,846
late in New York on Thursday.
"Platinum supply was already tight and demand was growing.
And now there are concerns that we might see additional
physical squeeze and that's pushing the price higher," said
Frederic Panizzutti, precious metals analyst at MKS Finance.
"We might see a rise of another $50 in the short term."
South Africa has appealed to mining companies for help in
cutting power consumption to ease a power crisis caused by the
failure of electricity generation to match economic growth.
Platinum producers in the country, which accounts for about
80 percent of the world's output, halted mining operations for
five days in January with a significant loss of production.
"The platinum market seems very nervous. The situation
might normalise in the sense that there won't be any major mine
stoppages because electricity is cut completely, but we are
unlikely to see mines getting 100 percent electricity supply,"
said Johannesburg-based Walter De Wet, analyst at Standard
Bank.
"You have got to accept that the South African mines will
need to operate at 90 percent of the electricity usage and a 10
percent cut in electricity will translate into more than 10
percent cut in production."
He said the country was likely to witness a production loss
of 300,000 ounces this year and the total market deficit could
rise as high as 400,000 ounces in 2008.
The metal has surged 23 percent in just more than one month
of the current year, adding gains on the top of 37 percent
spike in the entire year of 2008.
"It looks like people are concerned about platinum supply
as the auto industry is forecast to use more diesel. For
example, in China, all cars are mostly powered by diesel," said
George Gero, vice president of RBC Capital Markets Global
Futures in New York.
Until recently, only platinum was used in diesel
autocatalysts, but new technologies allow the use of up to 25
percent of palladium.
A large portion of the world's platinum production is used
as autocatalysts to clean vehicle exhaust fumes. The white
metal is also consumed by the jewelry industry.
GOLD RISES ON BUYBACK, FUNDS
Gold continued to trade above $900 on positive sentiment,
with supply problems, firmer oil and plans by some producers to
cut their hedging positions underpinning the market.
A surge in energy prices boosted gold's appeal as a hedge
against inflation. U.S. crude futures <CLc1> ended up $3.66 or
4.2 percent at $91.77 a barrel.
Spot gold <XAU=> rose as high as $920.10 an ounce and was
quoted at $918.00/918.70 an ounce by New York's last quote at
2:15 p.m. EST (1915 GMT), against $908.80/909.50 in New York on
Thursday.
The gold contract for April delivery at the COMEX division
of the NYMEX <GCJ8> finished up $12.30 or 1.4 percent at
$922.30 an ounce.
Jonathan Jossen, independent COMEX floor trader in New
York, said gold was riding the broad metals rally in spite of
initial profit taking ahead of the weekend.
"I just think gold is going to explode. There is big fund
buying in all months in the futures market" including the
December and June contracts, Jossen said.
Gold also jumped on strong fund buying as rising prices
triggered chart-based buy stops. The news of the world's top
gold miners AngloGold Ashanti <ANGJ.J> and Buenaventura
<BUEv.LM><BVN.N> reducing their hedge-books also boosted
prices.
Silver <XAG=> rose nearly 2 percent to $17.09/17.14 an
ounce from $16.74/16.79 late in New York on Thursday, while
palladium <XPD=> hit a high of $437 and was last quoted at
$436/441 from its previous finish of $421/425 in the U.S.
market.
(Additional reporting by Chikafumi Hodo in Tokyo; Editing by
David Gregorio)
