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., Reuters 1/29/2008 5:12:29 AM

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.