Platinum prices hit 4-month high, Gold prices rise on global economy hopes

Platinum and palladium have outperformed gold so far this year on an improving economic outlook, and after mining disruptions in South Africa as well as a drop in supply from Russia triggered fears of a deficit. Both metals are used in jewellery and auto catalysts.

Palladium is expected to set a record average high this year and platinum is seen posting its best price performance in two years as South Africa's supply problems worsen and the economic cycle starts to favour industrial metals, a Reuters poll showed.

Platinum hit a high of $1,714.75 an ounce and was at $1,712.99 by 0257 GMT, up $7.00. It powered to a record $2,290 in early 2008 after a power crisis in main producer South Africa disrupted mining and sparked fears of a supply deficit.

Palladium rose $1.05 an ounce to $764.49, after rising as high as 766.22 an ounce on Tuesday.

"It is quite clear that this year, the demand will (exceed) supply. I think we are seeing steady buying actually. There's a steady flow into those metals from investors all around," said Yuichi Ikemizu, branch manager for Standard Bank in Tokyo.

"I think we could try $1,750 for platinum and for palladium, the target is $800," said Ikemizu, referring to the short-term resistance levels.

Data showed on Tuesday the vast U.S. services sector expanded again last month, extending a three-year run of growth, while European business optimism hit an eight-month high, suggesting the euro zone economy is starting to recover.

Gold was little changed at $1,673.11 an ounce after it failed to sustain Tuesday's initial rise as U.S. stocks gained on stronger-than-expected earnings. U.S. gold was also little changed at $1,674.10.

Shares in Asia recovered on Wednesday as solid euro zone data calmed nerves jarred by potential political turmoil derailing the region's efforts to resolve its debt crisis, while the prospect of a dovish new governor for the Bank of Japan weakened the yen. A further slide in the Japanese currency spurred buying in gold futures on the Tokyo Commodity Exchange (TOCOM), with the most active contract, currently December, hitting a record for the fifth consecutive day at 5,068 yen a gram.

"My office in Tokyo told me there's buying in Japan, but it's pretty quiet here. Gold has been trading sideways for a while," said a dealer in Singapore, referring to cash gold.

"Premiums are still the same from last week at $1.20. There's regular supply, so we don't need to adjust them," said the dealer, referring to the premiums for local gold bars against London prices.

Hong Kong's net gold flow to mainland China jumped 47 percent in 2012 to a record high of 557.478 tonnes, indicating robust demand in China, which vies with India to be the world's top gold consumer.

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