(REUTERS) -- Platinum rallied for a fifth day in a row on Tuesday, its longest streak of gains since October that took the price above that of gold for the first time in six months, while gold itself fell below $1,700 an ounce ahead of a U.S. rate decision later.

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 at $1,692.50 an ounce by 1050 GMT, up 0.2 percent on the day, compared with a 0.3 percent fall in the gold price, which was quoted at $1,692.05 an ounce.

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, Nic Brown, head of commodity strategy at Natixis said.

We think the fundamentals of platinum are much better than gold's fundamentals, he said, adding that industrial demand for platinum from the European auto market was likely to be lackluster, while jewelry demand in key consuming nations such as Japan and China could help offset that.

Much of the boost to the platinum price this year has come from a month-long stoppage at world number two producer Impala Platinum's (IMPJ.J) largest facility at Rustenburg, which the company said cost it nearly 200,000 ounces in production and would likely cut deliveries in April by up to 50 percent.

A government crack-down on safety in mines that started in the later stages of 2011 led to sharp decreases in output at some of Impala's major rivals, such as Anglo Platinum (AMSJ.J), Aquarius (AQP.L) and Lonmin (LMI.L).

The demand side of the platinum market is less rosy. Platinum relies most heavily on the European auto market for consumption, where it is used in catalytic converters in diesel-powered vehicles and where the euro zone debt crisis threatens to push the entire region into recession.

European economic weakness poses a risk. Platinum loadings are considerably greater in diesel-fired engines, which are more popular in Europe, James Steel, HSBC analyst, wrote in a recent outlook for the platinum group metals.

Thus, the less-robust outlook for European auto demand for this year and next, according to HSBC auto analysts, is likely to be reflected in less-vigorous platinum demand.

Steel added that HSBC's auto equity team expected a modest pickup in global auto demand, which should sustain platinum consumption.

Speculators have turned more bullish on platinum this year, with holdings of U.S. platinum futuresby speculators rising by nearly 50 percent since the end of last year to their highest in six months, compared to a rise of about 25 percent in speculative holdings of gold futures.

FED FOCUS

The key event risk for financial markets later on Tuesday was the decision on U.S. monetary policy from the Federal Reserve, which is expected to signal it will keep benchmark rates unchanged, near zero, but is unlikely to indicate, one way or another, its intentions to use additional policy measures to further stimulate economic growth.

Spot gold was bid at $1,694.79 an ounce by 1115 GMT, down 0.25 percent on the day, but up 1.5 percent in the last week.

The markets have attached a waning chance of the Fed indicating that it stands ready to add extra liquidity to the financial system via government bond purchases, or quantitative easing, that aims to keep interest rates low and curbs the dollar's strength.

Gold has more than doubled in price since the Fed unveiled its first round of QE in late 2008.

Gold is continuing to perform more like a risky asset than a safe haven, and is moving in harmony with commodities. Since the beginning of the month, the yellow metal has been trading at around the $1,700 a troy ounce mark, Commerzbank said in a note.

Today's meeting of the US Federal Reserve is likely to give little new impetus to the gold price even if the key interest rate is kept at its currently very low level.

The rise in the dollar against a basket of currencies .DXY posed a further headwind to gold, which tends to come under pressure as non-U.S. investors sell their bullion holdings to book a higher profit in their own currencies.

Even with the prospect of no more QE to sustain any major gold rallies, investors have maintained their interest in the metal, as evidenced by the rise in global holdings of gold in exchange-traded products to record highs this week.

The amount of metal held by the major ETPs reached 70.887 million ounces by the close of trade on Monday, having risen by 361,000 ounces so far in March, marking the third straight month of expansion in holdings.

In other precious metals, silver was down 0.1 percent on the day at $33.52 an ounce, while palladium eased by 0.3 percent to $693.80 an ounce.