Gold and platinum hit record highs

Singapore, Jan 25 | Updated: Jan 26 2008, 06:00am hrs
Gold and platinum hit all-time highs on Friday on dollar weakness, supply concerns, firm oil, and expectations of more interest rate cuts in the US.

Spot gold hit an intraday high of $914.50 an ounce, surpassing last weeks record peak. Gold was last quoted at $907.00/907.70 an ounce in New York on Thursday.

Platinum hit another record high of $1,618.50 an ounce on investment demand, gains in gold, and after Lonmin Plc slashed its sales outlook for the year. The metal was last quoted at $1,606/1,611 an ounce in New York.

The benchmark platinum future in Tokyo rose by its daily 120 yen limit to 5,350 yen a gram to track the cash market.

Platinum is confronted by a big supply and demand problem. The price will be very strong in the future. Within a month, the next price target is $1,650, said Yukuji Sonoda, precious metals analyst at Daiichi Commodities in Tokyo.

Miners in South Africa, the worlds largest platinum producer, have had to deal with electricity outages, as power utilities struggled to keep up with rising demand.

Lonmin, the worlds No 3 platinum producer, cut its sales outlook for the year, after first-quarter refined platinum output slid by nearly a fifth, due to safety shutdowns and persistent processing problems.

Sonoda said expectations of further US interest rates cuts, which have underpinned a recovery in stocks markets after a rout at the start of the week, have encouraged investors to buy commodities.

Thats a very good environment. By the end of June, gold will reach $1,000, said Sonoda, who also expected more investors to shift to gold from government bonds.

Gold had tumbled to a three-week low of $849.50 on Tuesday, as falling energy and equity prices forced investors to sell the metal to cover margin calls, but the Dow Jones industrial average has since recorded two consecutive days of gains, on hopes for interest rate cuts and a fiscal stimulus package.

Fed policy makers are scheduled to meet on January 29-30. A hefty emergency rate cut this week boosted sentiment in precious metals.

After breaking the high, we may look at $950, said Ronald Leung, director of Lee Cheong Gold Dealers in Hong Kong.

Gold could find solid support at around $908 an ounce on Friday and resistance was seen at $915, said Leung.

The euro was steady around $1.4760, bolstered after European Central Bank policymakers rejected talk of lower interest rates on Thursday and restated an intent to control inflation risks.