U.S. platinum firmly breaches $2,000, gold higher

NEW YORK, Feb 14 (Reuters) - New York platinum futures
firmly breached the $2,000 level on Thursday, as news of South
Africa's power crisis could persist for years fed fears of a
worsening market deficit for the white metal.

Gold contracts erased initial losses on inflation concerns
after crude oil resumed a rally toward $100 a barrel as energy
prices rose sharply on supply worries.

Carlos Sanchez, associate director of research with CPM
Group in New York, said that the South Africa news prompted
platinum's end users -- including automakers, jewelers as well
as investors from banks to exchange-traded funds -- to scramble
for the metal, bidding up prices in an already tight market.

"All along, there has been strong investment demand for
platinum. There's been strong industrial and fabrication demand
because of the autocatalyst sector and the rising production of
automobiles in the developing countries. I think we are still
heading higher," Sanchez said.

At 10:43 a.m. EST (1543 GMT), the active NYMEX platinum
contract for April delivery PLJ8 was up $21.30, or 1.1
percent, to $2,005 an ounce, after hitting a record high of
$2,030.60 in overnight trade. Spot platinum <XPT=> fetched
$1,997/2,007.

South Africa's state power firm set out plans on Thursday
to address crippling shortages, saying it would increase coal
purchases and buy back electricity from those industrial users
able to reduce their consumption.

Since early January, South Africa has been hit hard by
power cuts that forced mines to shut for five days last month
as well as stoking public anger, sending the rand sharply lower
and weakening investor confidence in Africa's biggest economy.

Platinum's major industrial use is in catalysts,
particularly in diesel vehicle catalysts, as it helps clean
environmentally damaging fumes from motor exhausts. Its
popularity in jewelry has expanded in recent years, especially
in China.

The April contract has now rocketed more than $500, or 35
percent, after hitting a bottom of $1,506.10 on Jan 22.

For sister-metal palladium, the NYMEX March contract PAH8
gained $1.95 to $441 an ounce. Spot palladium <XPD=> fetched
$435/439.

GOLD TURNS HIGHER

Platinum's rally and strengthened crude oil prices boosted
gold futures on Thursday.

The gold contract for April delivery at the COMEX division
of the New York Mercantile Exchange GCJ8 climbed $2.90 to
$913.10 an ounce. It peaked at $917.30 after bottoming at
$904.80.

Sharply higher crude oil boosted bullion's appeal as a
hedge against inflation. U.S. crude futures CLc1 rallied $2
to trade above $95 a barrel by midmorning.

Sanchez said that gold pulled back recently because of
lower flight-to-quality demand as the financial and economic
concerns of the U.S. economy had temporarily disappeared.

"People are still seeing gold as a safe haven and as a
hedge against a volatile stock market, volatile currency
markets, and a hedge against economic and financial
uncertainties," Sanchez said.

Spot gold <XAU=> was quoted at $910.80/911.70, versus
Wednesday's New York close of $906.70/907.50. London bullion
dealers fixed the afternoon spot price at $906.00.

COMEX March silver SIH8 was up 5.70 cents at $17.410 an
ounce, trading between $17.150 and $17.520.

Spot silver <XAG=> was at $17.37/17.42, compared with its
last Wednesday quote of $17.28/17.33. London silver was fixed
at $17.26.
(Reporting by Frank Tang; Editing by Walter Bagley)