U.S. platinum, gold surge in broad commods rally

NEW YORK, Feb 19 (Reuters) - U.S. gold futures jumped 2
percent to a one-week high on Tuesday, boosted by a host of
bullish factors including inflation fears, a lower dollar and a
rally in platinum group metals prices.

Platinum contracts surged as much as 5 percent on the back
of supply problems in top producer South Africa, and
sister-metal palladium also spiked as speculative demand surged
due to worries of a huge deficit in the platinum market.

"I think that the gold is being led higher in part by the
strength in platinum, which is carried over by the power
situation in South Africa. In the short term, this is going to
continue to support platinum," said James Steel, metals analyst
with HSBC in New York.

At 10:20 a.m. EST (1520 GMT), the active NYMEX platinum
contract for April delivery PLJ8 jumped $62.30 or 3.0 percent
at $2,126.00 an ounce after hitting a record high of $2,174.00
in overnight trade. Spot platinum <XPT=> fetched $2,120/2,130.

Mines across South Africa, which account for 80 percent of
global platinum supply, have been hit by a lack of energy after
state utility Eskom [ESCJ.UL] asked the mining sector to cut
power use to 90 percent of normal needs to ease shortages.

Supply fears and strong investment interest have sent
platinum's end users -- including automakers, jewelers as well
as investors from banks to exchange-traded funds -- scrambling
for the metal, bidding up prices in an already tight market.

The April contract has now rocketed nearly than $700 or 45
percent after hitting a bottom of $1,506.10 on Jan 22.

Lofty platinum prices stirred buying interest in palladium
as a possible substitution, Steel said. "I think palladium is
being dragged up by platinum, not because it's strong in
itself," he added.

The NYMEX March contract PAH8 surged $27.65 or 6.1
percent to $479.35 an ounce. It had initially hit a record high
of $492.50. Spot palladium <XPD=> fetched $475.00/480.00.

Both platinum and palladium are used as autocatalysts to
help cleanse environmentally damaging fumes from motor exhausts.
Until recently, only platinum was used in diesel engines, but
new technologies allow the use of up to 25 percent of palladium
in diesel autocatalysts.

GOLD TARGETS $930

Inflation worries because of a spike in energy prices and
concerns about an overheated economy in China boosted gold's
appeal as a hedge against inflation on Tuesday.

The Chinese consumer inflation rate surged in January to an
11-year high of 7.1 percent and looks set to rise further,
cementing expectations that Beijing will stick to a tight
monetary policy despite softening economic growth.

"The Chinese inflation data yesterday was supportive to
gold, without a doubt," Steel said.

The gold contract for April delivery at the COMEX division
of the New York Mercantile Exchange GCJ8 was up $20.30 or 2.2
percent to $926.40 an ounce. It had peaked at $928.80 after
bottoming at $903.20 earlier.

Other market-watchers also cited increasing demand in
bullion as an alternative investment because of the ongoing
issues with the global credit markets.

Credit Suisse (CSGN.VX: Quote, Profile, Research) has written $2.85 billion off the
value of its asset-backed investments and found mismarking and
pricing errors on its books, it revealed on Tuesday.

Markets were closed Monday in observance of U.S. Presidents
Day.

Spot gold <XAU=> was quoted at $922.70/923.50 versus
Friday's New York close of $903.00/903.80. London bullion
dealers fixed the afternoon spot price at $924.00.

COMEX March silver SIH8 was up 28.70 cents or 1.7 percent
to $17.405 an ounce, trading between $16.965 and $17.490.

Spot silver <XAG=> was at $17.36/17.41 compared with its
last Friday quote of $17.11/17.16. London silver was fixed at
$17.25.
(Reporting by Frank Tang, editing by Matthew Lewis)