Platinum rose to a 10-month high above $1,500 an ounce early on Tuesday, extending its rally to a fourth consecutive session, boosted by long-term supply worries, despite the end of South Africa's mining strike. Gold reversed gains as investors took profits after strong exchange-traded fund buying sent prices to a near two-month peak earlier.
Fears of further labour unrest continued to support platinum group metal (PGM) prices. Last week, the world's biggest platinum producers said they must restructure operations after reaching a wage settlement with miners to end a five-month strike. On Tuesday, members of South Africa's largest union NUMSA said members could down tools in a wildcat strike at state-power utility Eskom, while more than 220,000 South African engineering and metal workers launched a strike.
"It is the uncertainty over possible restructuring, combined with how quickly the industry can gear up production that will influence prices over the summer," said James Steel, HSBC's chief precious metals analyst. "Supply tightness and long-term production concerns will buoy PGM prices in the near term." Spot platinum hit its highest since September at $1,511 an ounce and was up 1.8 percent at $1,507.80 an ounce by 1:29 pm EDT (1729 GMT).
The NYMEX platinum contract for October delivery rose $30.1 to $1,513 an ounce. Spot palladium was up 1.5 percent at $852.35 an ounce. Also underpinning PGM prices are demand hopes after major automakers reported better-than-expected US sales in June. This capped a strong second-quarter comeback from a brutal winter, even as some companies displayed signs of softening demand for their most popular models. Among other precious metals, gold hit its highest since late March on fresh signs of interest from investors in futures and bullion-backed ETFs.
Spot gold was down 0.1 percent at $1,325.20, having earlier hit a three-month high at $1,332.10 an ounce. US COMEX gold futures for August delivery were up $3.70 an ounce at $1,325.70. The world's largest gold exchange-traded fund SPDR Gold Shares reported a 5.7 tonne inflow on Monday, the biggest one-day change it has reported in its holdings since March 10.
"The significant change in ETF flows this year compared to last year is a key factor that is helping gold - that the aggressive ETF selling of 2013 has not made a comeback has provided ongoing support," UBS analysts said in a note. Silver was up 0.2 percent at $21.01 an ounce.
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