Platinum climbs on strike action, gold holds near $1,290/oz

Written by Reuters | London | Updated: May 21 2014, 01:00am hrs
Platinum prices rose back towards two-month highs on Tuesday as the longest and costliest miners' strike in South African history ground on, while gold steadied as gains in the dollar held it near key chart support.

Platinum climbed ahead of a ruling by South African courts on whether mining companies hit by the strike are allowed to contact workers directly with their latest wage offers.

Spot platinum was up 0.4 percent at $1,469.30 an ounce at 1211 GMT. It had earlier hit a high of $1,474.50, not far from last week's peak of $1,483.50, its strongest since early March.

Despite recent gains, the miners' strike in top platinum producer South Africa, source of around three-quarters of world supply, has not led to significantly higher prices due to the availability of above-ground stocks.

"Breaking early May highs and resistance at $1,480 an ounce could still prove to be difficult," VTB Capital analyst Andrey Kryuchenkov said. "Still, the market is lacking liquidity. All major players are attending the London Platinum Week events this week, which could add to choppy trading."

The four-month action against Anglo American Platinum , Impala Platinum and Lonmin, has disrupted 40 percent of platinum output and could cost 1 million ounces of production this year.

The strikes turned violent this month, with four miners killed as more employees tried to report for work, ignoring calls by the union to continue protesting.

Meanwhile gold remained near $1,290 an ounce as the dollar index rose 0.1 percent and an industry report showed gold demand in major consumers China and India fell in the first quarter.

Spot gold was at $1,290.70 an ounce, little changed from the previous day, while U.S. gold futures for June delivery were down $2.60 an ounce at $1,291.30.


The World Gold Council said on Tuesday consumer gold demand in the world's biggest buyer China fell 18 percent to 263.2 tonnes, with Chinese demand for gold coins and bars down 55 percent in the first quarter, offset only partially by a 10 percent rise in jewellery offtake.

Indian consumer demand was down by just over a quarter to 190.3 tonnes, although a drop in sales from bullion-backed investment funds kept overall demand steady.

"The WGC report ... has been the focus today, together with a stronger dollar," Ole Hansen, head of commodities research at Saxo Bank, said. "Geopolitics and the recent widening of yield differentials in Europe are currently not receiving much focus."

Gold trading was quiet overnight in Asia on Tuesday, Swiss bullion house MKS said in a note.

"In recent days, despite the premium over spot on the Shanghai Gold Exchange hovering around $2, as well as the Japanese adding to their net long positions on Tocom ... gold has been unable to gain any upside traction," it said.

Among other precious metals, spot silver was down 0.1 percent at $19.31 an ounce, while spot palladium was up 0.5 percent at $816.72 an ounce.

Palladium holdings of exchange-traded funds hit record highs after an 8,000-ounce inflow into Standard Bank's AfricaPalladium fund on Monday.