Gold, Platinum Rise to Records as Mines Close; Crude Oil Gains

By Danielle Rossingh

Jan. 25 (Bloomberg) -- Gold and platinum rose to records in London as a shortage of electricity in South Africa forced mining companies to shut production. Oil and copper also advanced.

AngloGold Ashanti Ltd., Gold Fields Ltd. and Anglo Platinum Ltd. shut their South African mines because of power problems. The nation is the world's biggest platinum producer and ranks second, after China, for gold output. Oil rose after U.S. lawmakers announced an economic package to avoid recession in the world's biggest energy-consuming country. Copper advanced to its highest in more than a week after Chinese stockpiles plunged.

``It's kind of a perfect storm'' for precious metals, said Wolfgang Wrzesniok-Rossbach, head of marketing and sales at Hanau, Germany-based Heraeus Metallhandels GmbH, which owns five precious-metal refineries. ``There are absolutely no platinum reserves, so any supply disruption will have an impact.''

Gold for immediate delivery rose as much as $10.89, or 1.2 percent, to a record $923.73 an ounce, and traded at $922.15 as of 11:38 a.m. in London. Platinum for immediate delivery rose as much as $90.50, or 5.6 percent, to an all-time high of $1,701 an ounce in London.

South Africa accounts for about 11 percent of global gold supply from mines and 78 percent of platinum output.

``Most gold mining is done underground in South Africa, which means they've had to stop completely, and the price has reacted,'' Wrzesniok-Rossbach said by telephone.

Gold also rose as some investors bought the metal as a hedge against inflation stoked by higher oil prices, Ross Norman, director of London-based TheBullionDesk.com and a former bullion trader, said by telephone.

Crude Oil Gains

Crude oil for March delivery rose as much as $1.03, or 1.2 percent, to $90.44 a barrel on the New York Mercantile Exchange, and traded at $90.09 as of 11:39 a.m. in London. Futures reached a record $100.09 a barrel on Jan. 3.

Speculation that tax rebates for households and businesses planned by President George W. Bush and Congress would allow the U.S. to skirt recession outweighed the impact of larger-than- expected increase in crude and gasoline inventories reported by the Energy Department yesterday.

``Primary upside risk will come from further recovery in equity values if White House stimulants take effect along with a serious bout of cold weather hitting the U.S.,'' said Robert Laughlin, a senior broker at MF Global Ltd. in London.

The UBS Bloomberg Constant Maturity Index, a gauge of 26 commodities, advanced 2.1 percent yesterday, its biggest one-day gain since Jan. 2. It rose another 1.3 percent today.

Gold for February delivery rose as much as $18.50, or 2 percent, to a record $924.30 an ounce on the Comex division of the New York Mercantile Exchange.

Silver Jumps

Silver for immediate delivery jumped 19 cents, or 1.2 percent, to $16.61 an ounce, the highest since November 1980, according to data on Bloomberg.

Platinum futures rose $57.40, or 3.6 percent, to $1,670.40 an ounce in New York.

Aquarius Platinum Ltd. said production at its Everest mine in South Africa stopped after the contractor left. Lonmin Plc, the world's third-biggest platinum producer, yesterday cut its sales target for fiscal 2008 by 4.4 percent because of accidents and a strike in South Africa.

Supply of the metal used in car catalysts and jewelry has fallen short of demand in seven years since 1999, according to London-based Johnson Matthey Plc, the world's largest distributor of the metal.

Platinum may jump to $2,000 an ounce this year, Michael Widmer, director of metals research at Lehman Brothers Holdings Inc. in London, said in an interview today.

Platinum Shortfall

Platinum supply may fall short of demand by as much as 500,000 ounces this year, Wrzesniok-Rossbach said.

Anglo Platinum, the world's largest producer of the metal, yesterday said output at its second-biggest mine was disrupted by flooding and it may take as long as 12 weeks to get back to full capacity. The Amandelbult mine in South Africa may lose 50,000 to 70,000 ounces of production, representing almost four days of global supply.

Copper for delivery in three months increased $108, or 1.5 percent, to $7,128 a metric ton as of 11:40 a.m. on the London Metal Exchange.

China's Shanghai Futures Exchange reported that stockpiles fell 8,397 metric tons, or 32 percent, in the past week, to 18,158 tons. Wire and pipe manufacturers will be on a week-long holiday starting Feb. 6 for the Lunar new year.

``There's a sense that the Chinese are restocking ahead of the Chinese new year holiday,'' said John Meyer, an analyst at Fairfax I.S. Plc in London. ``There is an expectation that Chinese demand for copper and other commodities is going to continue to rise.''

To contact the reporter on this story: Danielle Rossingh in London at drossingh@bloomberg.net

Last Updated: January 25, 2008 06:52 EST