Gold futures edged lower on Wednesday while platinum surged to a historic high above $2,000 an ounce on continuing concerns of lower output by South Africa, the world's largest platinum producer.
Gold for April delivery ended down 90 cents at $910.20 an ounce. Earlier, the precious metal hit an intraday low of $899.50 an ounce.
Platinum for April delivery soared to a new record of $2,001.40 an ounce on the New York Mercantile Exchange. The contract rallied $61.90 to end at $1,983.70 an ounce.
Severe power shortages in South Africa, the world's biggest platinum producer, have forced many major mining companies to cut down on power usage. Eskom Holdings Ltd., South Africa's state-run utility, allows top mining companies, like AngloGold Ashanti Ltd., to receive only 80 to 90 percent of their usual required amount of power. The power shortages may cut platinum output in South Africa by 500,000 ounces, Barclays Capital said last Friday.
As a result, mining companies have revised their production forecasts downward. Anglo Platinum, the biggest platinum producer, revised its production forecast to 2.4 million ounces for 2008, down from an initial 2.8 to 2.95 million ounces.
The G7 heads of industrial nations met over the weekend and approved gold to be sold by the International Monetary Fund. The IMF is the third largest holder of gold in reserves after the U.S. Federal Reserve and the German central bank.
In currencies, the dollar rose against most major counterparts on Wednesday as a result of better-than-expected retail sales in January, which gained 0.3 percent instead of dropping 0.3 percent as economists predicted.
The dollar index, which tracks the performance of the greenback against a basket of six major currencies, was at 76.570, up from 76.473 in late U.S. trading on Tuesday.
As the dollar is showing signs of strengthening, the precious metals find that the bids have faded,'' said Dennis Gartman, economist and editor of the Gartman Letter.
On Tuesday, gold futures declined to $911.10 an ounce, down $15.60. Gold demand dropped 17 percent in the fourth quarter as prices at the highest in 27 years deterred buyers, the producer- funded World Gold Council said.
While the current dip may still be viewed as a buying opportunity, the metal's failure to rally ... and to conquer chart resistance at $927 suggests further consolidation may be necessary, with gold potentially filling some chart gaps between the $845 and $875, said James Moore, an analyst at TheBullionDesk.com, in a research note.
Also on Nymex, March silver gained 10.30 cents at $17.353 an ounce, March palladium rose $7.55 at $439.05 an ounce, while March copper dropped 2.95 cents to end at $3.5305 a pound.