Platinum rose for a fifth day in a row on Tuesday, the industrial metal's longest stretch of gains since October, regaining its premium to weaker bullion for the first time in six months. Gold came under pressure after a brief flurry to above $1,700 per ounce, as upbeat economic data lifted the US dollar ahead of the Federal Reserve monetary policy meeting.
The price of platinum has gained more than 20 percent so far this year, propelled by supply disruptions in South Africa, the world's largest producer, where safety stoppages and illegal strike action at a major mine have eroded output. Spot platinum was bid up 0.57 percent at $1,697.74 an ounce by 1.14 pm EST (1714 GMT), eking out a small premium to gold and ending a rare trend of the last six months.
Spot gold was bid at $1,669.91 an ounce, down 0.13 percent on the day. With platinum back in pole position for the first time since September, pressure on gold may intensify, traders said. "There's likely some pressure now that platinum has regained its premium relative to gold. Once it crossed the even line, people are maybe jumping a bit more over to it," said Donald Selkin, chief market strategist with National Securities Corp in New York.
Much of the boost to the platinum price this year has come from a month-long stoppage at the world's second-largest producer Impala Platinum's largest facility at Rustenburg, which the company said cost nearly 200,000 ounces in production and would probably cut deliveries in April by as much as 50 percent.
A government crackdown on mine safety that started in late 2011 also led to sharp decreases in output at some of Impala's major rivals such as Anglo Platinum, Aquarius and Lonmin. "We have been ragingly bullish on platinum this year. We perhaps got in a tiny bit too early, but this is one we have been plugging very strongly," said Nic Brown, head of commodity strategy at Natixis.
"We think the fundamentals of platinum are much better than gold's fundamentals," Brown said, pointing to healthy jewellery demand in consuming nations such as Japan and China.
But the industrial demand outlook is less rosy for platinum, which relies heavily on the European auto market, where it is used in catalytic converters in diesel-powered vehicles. That demand could take a big hit if the euro zone debt crisis pushes the region into recession. Speculators have turned more bullish on platinum this year, with holdings of US platinum futures rising by nearly 50 percent since the end of last year to their highest in six months, compared with a rise of about 25 percent in speculative holdings of gold futures.
In other precious metals, silver was up 0.09 percent on the day at $33.61 an ounce, while palladium was up 0.98 percent at $702.70 an ounce.