Gold, Platinum Hit Record on Supply, Rate Cut Hopes

Gold and platinum hit historic highs for a third straight day on Tuesday and silver rallied to a 27-year peak on expectations of more U.S. rate cuts and fears about South African output.

Spot gold rose as high as $933.10 an ounce and was quoted at $933.00/933.90 by 6:22 EST, against $927.50/928.20 late in New York on Monday. The metal has gained about 11 percent so far this year.

Platinum hit $1,735 an ounce as buying accelerated after a power crisis forced miners in South Africa to stop operations last week. Prices later eased on profit taking.

The dollar steadied against a basket of major currencies, with investors debating the likely size of a widely expected U.S. Federal Reserve interest rate cut this week and the chances of a U.S. recession.

The Fed lowered rates by 75 basis points last week, and is expected to cut again by as much as 50 basis points when its two-day scheduled meeting ends on Wednesday. Weaker-than-expected U.S. housing data on Monday backed the case for growth-boosting monetary easing.

A rate cut tends to weaken the dollar as investors look for alternative assets, including gold, for better returns. Bullion prices also often move in the opposite direction of the dollar., Reuters
1/29/2008 5:12:29 AM