SINGAPORE Platinum spiked to another record high above $1,800 an ounce in volatile trade on Tuesday, with South African mines reporting slow progress in jacking up production in the midst of an electricity supply crisis.
Platinum's rally lifted sister metal palladium to a six-year high but gold struggled after a drop to its lowest in nearly two weeks at $891.65 an ounce on Monday as investors booked profits from last week's record high of $936.50 an ounce.
Spot platinum hit an intraday high of $1,809 an ounce before Japanese-led selling dragged it down to $1,775/1,780 an ounce, down from $1,790/1,800 late in New York on Monday.
But with lingering supply worries, dealers said the upward trend was much intact for the metal, which has risen almost 17 percent this year.
"The demand is there. I think $2,000 seems to be the next target. Speculators are buying platinum," said Ronald Leung, director of Lee Cheong Gold Dealers in Hong Kong.
Palladium jumped as high as $426.50 before slipping to $419.00/423.00 an ounce, down from $423/428 late in the U.S. market.
Platinum and palladium are used in jewellery and in vehicle catalysts, where they help clean exhaust gases.
The worst was far from over for South African mines, which produce four-fifths of the world's platinum, after state power firm Eskom allowed them only limited increases in their electricity consumption.
Tokyo platinum futures also touched record highs. The benchmark December contract on the Tokyo Commodity Exchange hit an all-time peak of 5,938 yen per gram before profit taking erased much of the gains.
The contract ended 109 yen lower at 5,759 yen.
"There's a change in attitude after the morning session, but I think it's just a normal case of profit taking," said a dealer in Hong Kong.
Gold was under pressure this week, overshadowed by platinum, after Friday's rally to record high induced profit taking, but some dealers said the metal was still on track to touch new highs due to uncertainties in the dollar's outlook.
Spot gold fell to $895.60/896.50 an ounce from $904.40/905.10 late in New York. It earlier fell as much as 1.1 percent to $894.00.
Gold has gone up by as much as 12 percent this year, and physical dealers expect buying on dips from jewellers to persist, though trading has begun to slow down in Asia ahead of this week's Lunar New Year celebration.
The price of gold is likely to peak at just over $1,000 per ounce in 2008 and benefit from any weakening of the U.S. economy as investors seek new havens for their funds, London-based consultancy GFMS said on Monday.
"Some of the factors that have supported the gold price still remain present," said David Moore, a commodity analyst at the Commonwealth Bank of Australia.
"For the time being, the possibility of further U.S. interest rate cuts in coming months, maybe some further fragility in the U.S. dollar, concerns over potential inflation are factors that might see gold being very volatile but volatile at higher level."
The U.S. Federal Reserve cut a benchmark interest rate by a cumulative 1.25 percentage points in the last two weeks of January to 3 percent in an effort to prevent the economy from sliding into recession.
The euro was steady at $1.4826 after rising on Friday to just below the lifetime high of $1.4968 after U.S. data showing companies shed workers in January for the first time in 4-½ years.
COMEX's April gold futures GCJ8 fell $9.9 an ounce to $899.5 an ounce.
Silver edged down to $16.53/16.58 an ounce from $16.69/16.74 in New York.
Precious metals prices at 0032 GMT
Metal Last Change Pct chg YTD pct chg Turnover
Spot Gold 894.00 -9.00 -1.00 7.36
Spot Silver 16.53 -0.14 -0.84 11.92
Spot Platinum 1770.00 -20.00 -1.12 16.45
Spot Palladium 419.00 -4.00 -0.95 13.86
TOCOM Gold 3107.00 -41.00 -1.30 1.54 74023
TOCOM Platinum 5759.00 -109.00 -1.86 7.87 88073
TOCOM Silver 573.10 -8.90 -1.53 5.93 1202
TOCOM Palladium 1463.00 12.00 +0.83 8.29 4215
TOCOM prices in yen per gram, except TOCOM silver which is priced in yen per 10 grams. Spot prices in $ per ounce.
(Editing by Ben Tan)