* 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 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
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
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
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
"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
(Additional reporting by Clara Denina in London; Editing by
Grant McCool and David Gregorio)