NEW YORK Platinum fell 2 percent on Tuesday following news that striking platinum miners at South Africa's Lonmin (LONJ.J) mine accepted a pay offer that could have them returning to work on Thursday.
After trading mostly higher early in the session, the metal suddenly nose-dived over $50, or 3 percent, within 10 minutes in response to news of the agreement at Lonmin's Marikana mine.
The metal, mostly consumed as an autocatalyst, posted its largest two-day decline since March, as No. 1 producer Anglo American Platinum (AMSJ.J) also said it had resumed operations in the strike-hit Rustenburg area.
The fast-moving and somewhat unexpected news from South Africa, which holds more than 80 percent of the world's platinum reserves, pushed gold off its high and left bullion up slightly on the day.
"It takes out the premium because of a shortage caused by an immediate strike," said Frank McGhee, head precious metals trader at Integrated Brokerage Services LLC.
"The rally in platinum may be over now, at least for a while," he added.
Prior to the decline that started on Monday, platinum had rallied about 24 percent after a deadly August clash between Lonmin miners and police at the Marikana mine stoked supply worries.
Spot platinum dropped 2.2 percent to $1,623.75 an ounce by 2:32 p.m. EDT on Tuesday, having lost nearly 4.5 percent in the past two days.
Turnover was high in U.S. platinum futures. Trading volume of all NYMEX contract months was near 22,000 lots, about 30 percent over its 30-day average, preliminary Reuters data showed.
Analysts said that platinum prices are vulnerable to a pullback due to sluggish global industrial demand, but lingering labor issues with the South African mining sector should underpin prices.
Palladium was down 1.7 percent at $661.75 an ounce.
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After initially rising near its six-month high, gold ended slightly higher, rebounding from the previous session which was weighed down by plummeting crude oil futures.
Spot gold rose 0.3 percent to $1,765.95 an ounce.
U.S. COMEX gold futures for December delivery settled 60 cents higher at $1,771.20 an ounce, with volume about 10 percent over its 30-day average.
Analysts said that gold's gains were checked by caution over the effectiveness of the U.S. Federal Reserve's third round of bond buying, known as quantitative easing. The news sent gold to a fourth consecutive weekly rise last week.
On Tuesday, Chicago Fed President Charles Evans said the U.S. central bank will likely move to keep monthly bond buys at its current $85 billion pace into the new year, even after a program accounting for about half of that expires at the end of 2012.
Silver rose 1.1 percent to $34.57 an ounce.