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Gold falls in Europe, platinum off record peak

(Reuters)
Filed on December 27, 2007

LONDON - Gold fell on Thursday on profit taking but traded not far from one-month highs, with firm oil and tensions in the Middle East supporting the market.

Platinum also slipped from a record high, but analysts said they expected the metal to hit new highs in the near term.

Trading volumes were thin as many players were away or keeping their positions light due to year-end holidays, but the outlook remained positive and analysts said they expected precious metals to advance further in the new year.

“The next few days are going to remain quite thin and choppy, but it certainly looks as if the market is firm and the firmness is here to stay,” said James Moore, precious metals analyst at TheBullionDesk.com.

“The dollar is on a back footing and we have seen investor inflows into gold. People are looking to diversify their accounts. Certainly gold remains bullish looking into 2008.”

Spot gold rose as high as $825.40 an ounce before falling to $821.70/822.40 at 1051 GMT, against $823.00/824.30 late in New York on Wednesday, when it hit a high of $826.10, the highest since Nov. 27.

Gold has gained about 30 percent this year.

Safe-haven buying in gold intensified in the previous session after Turkish warplanes bombed Kurdish guerrilla targets in northern Iraq. It was the fourth cross-border raid in five days.

The metal was also helped by oil, which held firm near $96 a barrel after a three-day rally as traders awaited official data forecast to show a decline in U.S. crude inventories for the sixth week running.

“As investors continue to accumulate gold in their portfolio and equity returns turning to be risky, gold would continue to rise, but may have to struggle again as it reaches the recent highs,” said Pradeep Unni, analyst at Vision Commodities.

Gold held in New York-listed StreetTRACKS Gold Shares, the world’s largest gold-backed fund, rose to a record high of 627.88 tonnes on Wednesday. It has surged nearly 40 percent this year.

In other bullion markets, U.S. gold futures fell, with the most active February contract trading down $2.70 at $826.50 from the New York settlement.

Platinum off record high

Platinum eased from historic highs, but underlying sentiment remained bullish due to concerns over supply tightness. Spot metal fell to $1,532/1,536 an ounce from a record high of $1,539/1,540 in New York on Wednesday.

The metal has gained 38 percent this year.

“The overall fundamentals remain relatively bullish for platinum and there may be further gains ahead in the short-term, with fundamental supply concerns hanging over the market,” Standard Bank said in a report.

“Though again, there is vulnerability in the short-term for profit taking as we head to the year’s close.”

Supply disruptions at some mines in South Africa, the world’s top producer, have resulted in a deficit this year and are likely to leave the market in a deficit again next year.

Aquarius Platinum said last week it lost an attributable 250 ounces of platinum group metals a day due to a strike at its Marikana mine in South Africa.

Johnson Matthey, the world’s top platinum refiner and fabricator, said in November the market would change course in 2007 and see a deficit of 265,000 ounces. It had a surplus of 65,000 ounces in 2006 after seven successive years of deficits.

Spot palladium rose to $363/368 from $360/364 an ounce, while silver eased 4 cents to $14.63/14.68.


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