Platinum Hits Two-Month High as South Africa Strike Looms

--Platinum for April delivery rises 0.6% to $1,462.40 a troy ounce

--Strikes scheduled to start on Thursday at South Africa's biggest platinum mining companies

--Gold settles down 0.3% at $1,238.60 as investors await economic data

(Adds gold settlement, price table.)

 
   By Matt Day 
 

NEW YORK--Platinum climbed to the highest price in more than two months ahead of a planned strike in South Africa that may interrupt production in the top producer of the precious metal.

Platinum for April delivery, the most actively traded contract, rose $8.90, or 0.6%, to settle at $1,462.40 a troy ounce on the New York Mercantile Exchange, the highest since Nov. 6. Palladium, produced in South Africa as a byproduct of platinum mining, also settled at a two-month high. Palladium for March delivery edged up 0.1% to $748.85 a troy ounce.

The Association of Mineworkers and Construction Union, which represents most of South Africa's platinum miners, plans to launch an open-ended strike on Thursday. The union is requesting pay increases for members to compensate for increased living costs, which they say are rising faster than salaries.

Anglo American Platinum (AMS.JO), Impala Platinum (IMP.JO) and Lonmin PLC (LMI.LN), targets of the planned strike and the three largest platinum mining companies by output, in a statement this week called the union's wage demands unrealistic.

"If this strike does continue, you could get an extreme market reaction" should investors anticipate a supply squeeze, said Peter Hug, director of trading with bullion dealer Kitco Metals Inc. in Montreal. Mr. Hug said he doesn't anticipate a lengthy strike, but platinum and palladium prices are likely to be supported "as long as that remains a possibility."

Investors have focused on the risk of supply shortfalls since an August 2012 strike at Lonmin's Marikana mine resulted in clashes with police and left dozens dead. The crisis sparked rolling strikes through South Africa's mining industry, cutting the country's platinum output by 16% that year.

This year, platinum supplies are expected to fall short of demand by about 12 tons, even without crippling strikes, analysts with Macquarie Bank estimate.

Analysts with the bank expect a reinvigorated global auto sector to boost demand for the metal, used in catalytic converters, helping push prices to $1,600 an ounce by the end of the year. Platinum and palladium are used chiefly in the devices, which scrub emissions from automobile exhaust.

Gold futures eased a bit on Wednesday as investors stuck to the sidelines ahead of readings on global manufacturing and U.S. unemployment data slated for release on Thursday.

The most actively traded gold contract, for February delivery, fell $3.20, or 0.3%, to settle at $1,238.60 a troy ounce on the Comex division of the Nymex.

Gold futures have largely tracked recent U.S. economic data as investors looked for clues as to the pace of the reduction in the Federal Reserve's stimulus program. Anticipation of a rollback in the Fed's bond-buying program has weighed heavily on gold as investors cashed out of the perceived safe-haven asset in favor of other investments. Many investors sought gold as a hedge against inflation and other economic risks in recent years as the Fed ramped up its bond purchases.

 
Settlements (ranges include open-outcry and electronic trading): 
London PM Gold Fix: $1,241.00; previous PM $1,238.00 
Feb gold $1,238.60, down $3.20; Range $1,237.40-$1,243.50 
Mar silver $19.839, down 3.1 cents; Range $19.770-$19.940 
Apr platinum $1,462.40, up $8.90; Range $1,447.80-$1,465.90 
Mar palladium $748.85, up 80 cents; Range $743.25-$749.65 
 

--Devon Maylie contributed to this article

Write to Matt Day at [e-mail]