U.S. platinum, gold hit highs on S.Africa mine halt

NEW YORK, Jan 25 (Reuters) - Supply fears due to suspended
mine production in top precious metals producer South Africa
drove U.S. platinum and gold futures to record highs on
Friday.

The world's biggest platinum producer, Anglo Platinum, and
top gold miners Anglogold Ashanti, Gold Fields and Harmony all
stopped mining after they were told by the state-owned power
utility it could not guarantee supplies to their operations.

Ralph D'Esposito, a platinum group metals floor trader,
said the stoppage, and possible further labor actions and
strikes, in South African mines could lead to a major shortfall
in platinum supplies, a bullish sign for prices.

"We still look good and, just like gold, it looks like we
are still going to go much higher," D'Esposito said.

On the New York Mercantile Exchange, the active April
platinum contract PLJ8 finished up $67.10, or 4.2 percent, at
$1,680.10 an ounce in the biggest one-day percentage gain since
August. In early trading it set a contract high of $1,694.90.

Platinum has been beset with supply problems due largely to
mine closures and industrial action resulting from accidents in
South Africa.

An informal survey of analysts by Reuters showed the market
balance for platinum, used in jewelry and to clean vehicle
exhaust fumes, at a deficit of 181,500 ounces by the end of
2008, narrowing slightly to 175,000 in 2009. [ID:nL23492373]

However, D'Esposito said platinum's rally was mainly fueled
by buying from commodity funds and that support from banks and
commission houses was largely absent.

"This is basically fund buying, speculative interest. The
commercials are not the buyers right now. It could easily come
off," D'Esposito said.

Platinum's sharp gains on Friday followed Thursday's 3.5
percent rise after Lonmin, the world's No. 3 platinum producer,
cut its 2007 sales outlook and reported lower output.
[ID:nL24509173]

Spot platinum XPT= was quoted at $1,671.50/$1,676.50,
after jumping to a record $1,697.00.

Sister-metal palladium jumped on platinum's strength. March
palladium PAH8 gained $9.40, or 2.3 percent, to $385.45 an
ounce and spot palladium XPD= was at $378.50/$383.50.

GOLD FUTURES AT RECORD

Gold futures also reached a record on the South Africa news
and a crude oil rally. However, a stronger dollar erased gold's
early gains.

The active February gold contract on the COMEX division of
NYMEX GCG8 closed up $4.90 at $910.70 an ounce, after it
reached a record high of $924.30 overnight.

Surging energy prices boosted gold's appeal as a hedge
against inflation. U.S. crude futures finished up $1.30 at
$90.71 a barrel.

COMEX estimated final gold volume at 222,395 contracts,
with options at 20,108 lots. Total turnover in Chicago Board of
Trade electronic 100-oz gold futures was 33,287 lots at 2:52
p.m. EST (1952 GMT) www.cbot.com/cbot/pub/page.

Total open interest in COMEX gold futures was 552,403 lots
on Thursday, up 6,899 lots from Wednesday.

At 2:15 p.m., spot gold XAU= was quoted at $913.00/914.00
versus Thursday's New York close of $907.00/907.70. London
bullion dealers fixed the afternoon spot reference price at
$918.25.

COMEX March silver SIH8 ended up 15.7 cents, or 1
percent, at $16.49 an ounce, after trading in a range from
$16.36 to $16.68.

Spot silver XAG= was at $16.43/16.48, compared with its
last Thursday quote of $16.35/16.40. London silver was fixed at
$16.53.
(Reporting by Frank Tang; Editing by Walter Bagley)