Published: Monday, 20 Aug 2012 | 3:45 PM ET
Gold futures rose to end at $1,623 as platinum prices jumped nearly 2 percent on Monday, hitting a two-month high after deadly violence at a mine in top producer South Africa triggered heavy speculative buying on supply worries.
Bullion prices edged up as trading volume for U.S. gold futures was on track to hit a 2012 low, while silver jumped almost 3 percent as platinum’s rally triggered short-covering.
Investors bought platinum on worries that mines in South Africa may produce less of the metal after 44 people were killed during a strike at Lonmin’s [LMI.L 640.00 — UNCH ]Marikana mine, which accounts for 12 percent of global platinum output.
“Platinum could test its 200-day moving average above $1,500 on the possibility that the Marikana mine can be shut down for an extended period of time or that strike ends up spreading to other mines,” said Phillip Streible, senior commodities broker at futures brokerage R.J. O’Brien.
Spot platinum [XPT= 1525.00 -16.90 (-1.1%) ] rose 1.6 percent to $1,487.49 an ounce, after hitting a high of $1,492.99 an ounce by 3:03 p.m. EDT, which marked its highest since June 18.
Trading volume of U.S. NYMEX platinum futures was 25 percent above its 30-day average, preliminary Reuters data showed.
Last week, platinum posted a 5-percent rally, its biggest weekly rise since February.
The metal soared 7 percent in the past three sessions, bringing its year-to-date gain to 7 percent, which means platinum has outperformed gold, silver and copper so far in 2012. On technical charts, platinum’s relative strength index is at 69.8, just a hair below 70 which is seen as overbought.
“Markets that are overbought can very easily get a lot more overbought before they go down,” said Adam Sarhan, CEO of Sarhan Capital.
Speculative fervor in platinum futures was evident even as about a third of the workforce trickled back to work at Lonmin on Monday. Analysts said the lost platinum production due to the work stoppage at Lonmin has been negligible so far.
Deutsche Bank said in a note that platinum market’s expected surplus for 2012 “could easily be wiped out” if labor violence prolonged at Lonmin or if the unrest spread to other mines.
Platinum’s climb also benefited sister metal palladium [XPD= 649.23 0.73 (+0.11%) ], which rose to an eight-week high at $608.50 an ounce in early trade. It was up 0.4 percent at $607.70.
Platinum Discount Narrows
Platinum’s rise narrowed its discount to gold to less than $130 an ounce from above $230 an ounce a week ago.
Platinum’s rally has lifted gold and silver, which have been recently trading in a range on speculation about whether the U.S. Federal Reserve and the European Central Bank could launch more gold-friendly monetary stimulus .
Spot gold [XAU= 1669.74 -0.11 (-0.01%) ] was down 0.3 percent at $1,620.74 an ounce by 3:03 p.m. EDT.
U.S. gold futures [GCCV1 1670.70 0.10 (+0.01%) ] for December delivery settled up $3.60 an ounce at $1,623.
Silver [XAG= 30.59 -0.18 (-0.58%) ] gained 2.7 percent at $28.79 an ounce.
Buying by central banks, a major support to bullion prices this year, was evident again last month, after Russia’s central bank said on Monday that it added another 18.7 tonnes of gold to its reserves in July.