Platinum Strikes Record; Gold Near All-Time High

Platinum strikes record; gold near all-time high

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Tue 4 Mar 2008, 8:59 GMT

SINGAPORE (Reuters) - Platinum struck a record for the second straight day on Tuesday, catching up with gold as a weaker U.S. dollar and persistent supply problems in South Africa ignited buying from speculators and investors. Platinum's gains pushed up sister metal palladium to a 6-1/2-year high. Gold was near an historical high hit the previous day and on track to touch $1,000 an ounce on expectations of further U.S. interest rate cuts and record high crude oil.

Spot platinum hit a high of $2,275 an ounce, surpassing Monday's top of $2,230 an ounce, and up from $2,230/2,237 an ounce late in New York.

"Platinum will be trying the $2,500 mark. It won't be surprising to see investors continue to buy platinum," said William Kwan, a dealer at Phillip Futures in Singapore.

Platinum, used in jewellery and auto catalysts to clean exhaust fumes, has risen more than 40 percent in 2008 as problems with power supply which disrupted mining in main producer South Africa triggered supply fears and sparked speculative buying. The most active Tokyo platinum futures currently February 2009, ended up by the daily 300 yen limit at 7,274 yen per gram.

Gold hit a bid high of $987 an ounce, up from $981.20/982.00 late in New York, within sight of Monday's all-time high of $989.30 an ounce.

"Gold is being pushed up by the general bullish sentiment across commodities. All hedge funds are buying the market up. They are increasing their long positions," he said.

"There's a possibility before the FOMC, the market may price in an aggressive rate cut, and push up the price to above $1,000," said Kwan.

The U.S. Federal Reserve's Federal Open Market Committee holds a one-day meeting on interest rates on March 18. Short-term interest rate futures showed about a 75 percent perceived chance of the Fed lowering its benchmark overnight lending rate by 75 basis points at its next meeting.

In theory, lower interest rates elevate gold's appeal as an alternative investment.

The dollar's trade-weighted index against six major currencies was 73.701 It hit 73.354 on Monday, its lowest level since the index was created in 1973.

"Prices beyond $1,000 seem inevitable, but beyond this psychological figure, price sustainability would be a key issue," said Pradeep Unni, an analyst at Vision Commodities in Dubai.

"Retail demand has hit rock bottom and this is a bad signal for the long-term bull market. For the moment, immediate resistance is likely around $992 and $1,004," he said.

The physical sector slowed to a trickle in Singapore on Tuesday after jewellers in Indonesia and Thailand cashed in their holdings the previous day to take advantage of record-high prices.

"I think there will be initial selling by jewellers when the price hits $1,000. But I am not sure if they will sell in huge quantity because after all, they haven't bought a lot lately," said a dealer in Singapore.

Premiums for gold bars were on par to the spot London price in Singapore, unchanged from last week Gold futures for April delivery on the COMEX division of the New York Mercantile Exchange added $1.0 an ounce to $985.2 an ounce - off its record high of $992.00 hit Monday.

Spot palladium rose as high as $588 an ounce, its highest in more than six years, up from $576/580 late in New York.

Silver edged up to $20.28/20.33 an ounce from $20.27/20.32 an ounce, within sight of a 27-year peak of $20.60 an ounce on Monday. Precious metals prices at 0842 GMT Metal Last Change Pct chg YTD pct chg Turnover Spot Gold 983.05 -0.35 -0.04 18.06 Spot Silver 20.30 0.00 +0.00 37.44 Spot Platinum 2266.00 36.00 +1.61 49.08 Spot Palladium 587.00 11.00 +1.91 59.51 TOCOM Gold 3288.00 20.00 +0.61 7.45 92198 TOCOM Platinum 7274.00 300.00 +4.30 36.24 40064 TOCOM Silver 679.00 10.70 +1.60 25.51 2958 TOCOM Palladium 2051.00 65.00 +3.27 51.81 28024 Euro/Dollar 1.5190 Dollar/Yen 103.28 TOCOM prices in yen per gram, except TOCOM silver which is priced in yen per 10 grams. Spot prices in $ per ounce. (Editing by Ben Tan)