U.S. gold futures fall below $900, platinum gains

NEW YORK, Feb 4 (Reuters) - Profit taking and chart-based
weakness sent U.S. gold futures below $900 an ounce early on
Monday, while platinum contracts extended last week's gains,
driven by supply worries.

"It's definitely profit taking and technical sales because
nothing else is moving. And it's breaking major support, which
is Friday's low of $908. It looks like it's going to be weak in
the near term," said Leonard Kaplan, president of Prospector
Asset Management in Evanston, Illinois.

At 10:50 a.m. EST (1550 GMT), the gold contract for April
delivery at the COMEX division of the NYMEX GCJ8 slid $12.80,
or 1.4 percent, to $900.70 an ounce. It peaked at $917.40
initially and had traded as low as $896.00 in early morning
trade, which marked a 1-1/2 week low.

Gold futures fell on Monday in spite of a largely unchanged
dollar and slightly higher crude oil prices, as investors
continued to take profits after the April contract traded near
its record high on Friday.

April gold finished sharply lower in extremely volatile
trade on Friday as a dollar surge and heavy profit taking
erased the metal's initial gains following a weak U.S. jobs
report.

"We remain wedded to the view that the USD (U.S. dollar)
will ultimately determine gold prices; although currently under
pressure, we believe the likelihood of a USD recovery later
this year holds the prospect of eventually drawing precious
metals lower," James Steel, metals analyst at HSBC in New York,
told clients in a research note.

Steel raised his gold forecast to $850 from $825 for 2008,
and to $725 from $650 in 2009.

Spot gold <XAU=> was quoted at $896.70/897.60, versus
Friday's New York close of $910.00/910.75. London bullion
dealers fixed the afternoon spot price at $893.75.

PLATINUM GROUP METALS SOAR

Platinum was trading just below the $1,800 mark on Monday.
The active NYMEX platinum contract for April delivery PLJ8
was up $21.30, or 1.2 percent, to $1,791.50 an ounce, after
reaching a fresh record high of $1,795.00. Spot platinum <XPT=>
fetched $1,786/1,791.

South African mines still made slow progress in bringing
back production after the state power firm allowed mining
companies only limited increases to their electricity
consumption.

"Mine output disruptions continue to fuel the rally in
(platinum and palladium). With 80 percent of global supplies
coming from the very mines affected by electricity woes, this
is not a surprise," Jon Nadler, senior analyst at Kitco Bullion
Dealers in Montreal, told clients in a note.

Palladium for March delivery PAH8 was up $5.95, or 1.4
percent, to $423.00 an ounce, after rising to a contract high
of $425.00. Spot palladium <XPD=> fetched $420/423 an ounce.

In other metals, COMEX March silver SIH8 was down 22.5
cents, or 1.3 percent, to $16.645 an ounce. It had initially
hit a high of $16.975 and bottomed at $16.445 an ounce.

Spot silver <XAG=> was at $16.60/16.65, compared with its
last Friday quote of $16.75/16.80. London silver was fixed at
$16.70.
(Reporting by Frank Tang)