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South africa will cut gold mining power till 2012 { February 19 2008 } Original Source Link: (May no longer be active)
http://ap.google.com/article/ALeqM5jND4r3B-VBZu2Ogg2_yzjYnPIP8gD8UTIASG1http://ap.google.com/article/ALeqM5jND4r3B-VBZu2Ogg2_yzjYnPIP8gD8UTIASG1
Precious Metals Spike on Supply Concerns
By STEVENSON JACOBS
February 19, 2008
NEW YORK (AP) — Precious metals prices surged Tuesday, pushed higher by a drop in the dollar and expectations that ongoing electrical power problems in South Africa will lead to a protracted decline in platinum and gold supplies.
Other commodities also rallied, with soybean futures hitting a record-high and crude oil rising above $99 a barrel.
A national power shortage in South Africa, the world's largest platinum producer and second largest gold producer, has left major mining companies operating at 90 percent of their usual energy supply, raising worries of a sharp production slowdown. The state-run electricity utility said last week that the power restrictions will likely continue until 2012, further unnerving investors and sending the metal to its highest levels ever.
Platinum for April delivery shot up $79.30 Tuesday to fetch $2,143 an ounce on the New York Mercantile Exchange, after earlier reaching a record $2,174 an ounce.
"It's a very powerful rally today. We still have profound disquiet in the markets as to what the electricity-related production declines are going to be," said James Steel, analyst with HSBC in New York.
Platinum has soared 35 percent since the start of the year. The metal's steep gains come amid tightening global inventories as automakers try to meet demand, particularly in Asia and Eastern Europe. Demand for the metal, used in jewelry and catalytic converters in automotive exhaust systems, has also surged due to stricter emissions standards.
Other precious metals joined platinum's rally Tuesday. Gold for April delivery soared $25.50 to $931.60 an ounce on the Nymex, while March silver advanced 46.2 cents to $17.580 an ounce. Nymex copper moved 19.90 cents higher to $3,7220 a pound.
"Gold and silver are getting a boost from platinum. The euro is very strong also, so that's also supporting gold," Steel said.
A weaker U.S. dollar encourages investors to turn to gold because the metal is known for holding its value. It also encourages foreign investors to buy the dollar-denominated metal, because the cost is not as high for those with stronger currencies.
The dollar weakened against most major currencies in Tuesday trading, with the euro buying $1.4742.
In agriculture markets, soybean futures hit a new high as investors bet that dwindling stockpiles and growing demand in Asia will pressure supplies of the grain used to feed livestock and make biofuel.
Soybeans for May delivery jumped 19.25 cents to $14.105 a bushel on the Chicago Board of Trade. The contract earlier touched an all-time high of $14.28.
Other agriculture futures also rose. March corn rose 3.25 cents to fetch $5.18 a bushel on the CBOT, while May wheat edged 1.25 cents higher to $10.435 a bushel.
In energy futures, crude oil jumped Tuesday on expectations of higher prices despite robust supplies and weakening demand.
Light, sweet crude for March delivery rose $4 to $99.50 a barrel on the Nymex as investors bet that crude prices will keep climbing despite evidence of plentiful supplies and falling demand.
Meanwhile, gasoline and heating oil prices spiked after an explosion Monday at an Alon USA refinery in Texas. The facility could be shuttered for weeks.
March gasoline jumped 8.70 cents to $2.5808 a gallon, and March heating oil added 7.48 cents to $2.7217 a gallon.
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Copyright © 2008 The Associated Press. All rights reserved.
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