Platinum prices jumped nearly 2% on Monday, hitting a two-month high after deadly violence at a mine in top producer South Africa triggered heavy speculative buying on supply worries.
Gold edged up 0.3% as inflow into the holdings of the world's largest bullion-backed exchange-traded fund boosted sentiment, and silver jumped 2% as platinum's rally triggered short-covering.
Investors bought platinum on worries that mines in South Africa may produce less of the metal after 44 people were killed during a strike at the Marikana mine owned by Lonmin, which accounts for 12% of global platinum output.
The metal soared 7% in the past three sessions, bringing its year-to-date gain to 7%, which means platinum has outperformed gold, silver and copper so far in 2012. On technical charts, platinum's relative strength index is at 69.8, just a hair below 70 which is seen as overbought.
"Markets that are overbought can very easily get a lot more overbought before they go down," said Adam Sarhan, CEO of Sarhan Capital.
Momentum buying should further underpin platinum after it climbed to a two-month high and on its outperformance in the metals complex, Sarhan said.
Spot platinum rose 1.8% to $1,491.49 an ounce, after hitting a high of $1,491.99 an ounce which marked its highest since June 18. Last week, platinum posted a 5% rally, its biggest weekly rise since February.
Speculative fervor in platinum futures was evident even as about a third of the workforce trickled back to work at Lonmin on Monday. Analysts said the lost platinum production due to the work stoppage at Lonmin has been negligible so far.
Deutsche Bank said in a note that platinum market's expected surplus for 2012 "could easily be wiped out" if labor violence prolonged at Lonmin or if the unrest spread to other mines. . .View Full Article