Gold, platinum hit record highs on S.Africa

By Veronica Brown

LONDON (Reuters) - Gold and platinum prices hit record highs on Friday as power cuts shut South Africa's mines, including many of the world's biggest.

London Metal Exchange (LME) aluminum also jumped as the market tried to price in the possibility of falling supplies in the key global metals producer.

Oil and other base metals firmed, with worries about demand allayed for now as a U.S. tax stimulus package and the prospect of further rate cuts helped soothe fears of a looming recession.

Gold topped $920 per ounce while platinum hit a record $1,697 on the power crisis in resource-rich South Africa.

The pit closures are the latest in a string of problems for the South African mining industry, which has been beset by closures due to fatal accidents and strikes over safety.

Supply concerns have been supporting platinum for months, reflected in rising lease rates for the metal.

An informal Reuters poll published earlier this week forecast the platinum market would stay in deficit in 2008, and 2009.

Analysts and investors said the prospect of further dollar weakness, due to expectations of more U.S. rate cuts next week, left precious metals well positioned to scale fresh heights.

"Precious metals is a very strong picture," said Graham Birch, head of BlackRock's Natural Resources fund.

"It was a very tight supply/demand situation for platinum but clearly it has been made worse by the power shortage in South Africa," he added.

By 11:53 a.m. ET, spot gold had trimmed gains to stood at $911.50/912.40, compared with $907.00/907.70 an ounce in New York on Thursday, while platinum was at $1,678.50/1,683.50 from $1,606/1,611. Both metals rose more than 30 percent in 2007.

Aluminum jumped to $2,544 a tonne, the highest in nearly two weeks, as investors fretted over South African supply.

"If you take some of the aluminum smelters in South Africa out of the market, then I think you are potentially facing a relatively tight market in aluminum," said Michael Widmer, analyst at Lehman Brothers.

OIL EXTENDS GAINS

Oil topped $91 a barrel, building on gains from the previous session after U.S. lawmakers confirmed an economic stimulus plan to dampen fears of a recession in the world's top energy consumer.