Platinum scaled a record peak for the seventh straight trading day on Friday, as persistent supply concerns in top producer South Africa ignited worries about a huge market deficit this year.
Other precious metals advanced on bullish market sentiment and nearly 2 percent jump in oil prices, with gold rising more than 1 percent towards its historic high of $936.50 an ounce and palladium hitting a six-year peak.
Spot platinum rose as high as $1,875 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.
"The supply/demand outlook remains very positive for platinum as there is no quick fix for the supply-side problems, while the bulk of demand is price-inelastic and inventories sit at historically low levels," Barclays Capital said.
"Even though investor sentiment is likely to remain positive, in our view, it is the metal's fundamentals and not funds that will drive prices to new highs," it said in a note. 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.
Spot gold rose as high as $919.60 an ounce and was last quoted at $918.90/919.80 an ounce, against $908.80/909.50 in New York on Thursday. "The fact that dips below $900 remain well supported continues to suggest that investors are still keen to increase their holdings. Once the current base building phase is over, the metal will look to challenge last weeks $936.80 high," said James Moore, analyst at TheBullionDesk.com.
Safety shutdowns and operational woes hit AngloGold Ashanti's fourth-quarter results. The world's third-biggest gold miner said a power crisis would dent future production. Peruvian miner Buenaventura said on Wednesday it would pay $434 million to unwind hedges on gold due for delivery in 2010 and 2012.
US gold futures advanced, with the April contract trading up $13 at $923 from the New York settlement. Silver rose nearly 2 percent to $17.06/17.11 an ounce from $16.74/16.79 in New York, while palladium hit a high of $437/441 from $421/425 in the US market.
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