* South Africa supply concerns further underpin PGMs
* Spot platinum at 3-month top above $1,701
* Spot palladium hits 16-month high above $702
* Spot gold above $1,687, after 1-month high over $1,695 (Updates with closing prices)
By Barani Krishnan
NEW YORK, Jan 17 (Reuters) - Platinum jumped to a three-month high on Thursday, passing the price of gold for the second session in a row after upbeat U.S. economic data boosted optimism about demand for industrial commodities such as platinum, a vital material for automakers.
Palladium also rallied, hitting 16-month highs, as investors in platinum group metals (PGMs) remained wary about supply shortages after miner Amplats announced this week an overhaul that could cut 400,000 ounces of platinum production in a year.
Gold set a milestone too, rising to a one-month high as the dollar gave back its early strength versus the euro.
The spot price of platinum hit a three-month high of $1,701.50 and was up 0.3 percent at $1,688.99 an ounce at 2025 GMT. Palladium was up 0.2 percent at $722.50, having matched a Sept. 2011 high of $727.
Bullion's spot price was at $1,687.34, up 0.5 percent, after rising to $1,695.56 -- a peak since Dec. 18. At their session lows, bullion and platinum were almost at parity at around $1,666 an ounce, while at their peak, the difference was about $5 in platinum's favor.
"There is a significant chance of platinum moving back to a normal type of premium of at least $100 (against gold)," INTL Commodities CEO Jeff Rhodes said.
"Potential for further supply shocks in the PGMs does have all the ingredients for an interesting few weeks in terms of prices," Rhodes added.
The rally came as upbeat U.S. housing and jobs data sparked a rise in U.S. stocks to five-year highs, boosting appetite for risk assets, particularly industrial commodities such as PGMs. The Thomson Reuters-Jefferies CRB index, which tracks 19 commodities, hit a 2-week high.
EXPLOSIVE DEMAND FOR PGMs
Platinum and palladium are integral for reducing toxic emissions from cars.
Analysts say explosive growth in China's automobile industry, and a November report from PGM specialist and refiner Johnson Matthey forecasting the biggest palladium deficit in 12 years, had combined to create the unusual price action.
Some caution that the rally, driven largely by buying from hedge funds and money managers, might have gone too far.
Thursday's run-up came in spite of news that miners at Amplats, or Anglo American Platinum, had returned to work after an illegal walkout to protest against the world's top platinum producer's plan to cut 14,000 jobs, close two mines and sell another.
Since the year began, platinum, which is also popular in jewelry making, has risen about 10 percent in price and palladium about 8 percent. Thomson Reuters data shows the Relative Strength Index for both metals at above 60, technically putting them in overbought territory.
Many still think prices will push higher.
"The two markets are up nicely, but it's not like the move has been parabolic. We do think PGMs have more to go," said Mark Luschini, chief investment strategist of Janney Montgomery Scott, a broker-dealer which manages $54 billion in assets.
GOLD REMAINS ABOVE 200-DAY MOVING AVERAGE
U.S. gold futures were up 0.3 percent at $1,687.70 an ounce.
Gold has been on the rebound, moving back above its 200-day moving average this week, after falling below that key technical level in early January when minutes of a Federal Reserve policy meeting showed concern about the scope of U.S. monetary easing.
"We are still in a period of trial, trying to rebuild the confidence into the gold market," Saxo Bank vice president Ole Hansen said. "We have not breached any critical levels yet to the upside, which could signal that further strength could be coming."
"While we still stay above the 200-day moving average around $1,662, there is a lot of nervousness in the market," Hansen said. "We've seen big swings at the start of January, we spent the last week trying to recover from that."
Dealers said physical buying interest for gold has ebbed, after a robust start to the year.
"What we did see in the gold dips was strong physical demand across the Asian world, including Thailand and India, but since (then), the physical market has definitely slowed," INTL's Rhodes said. (Additional reporting by Clara Denina in London; Editing by Grant McCool and David Gregorio)