Gold jumps above $900 as platinum hits record

London: Gold surged two per cent to trade above $900 on Thursday and platinum hit a historic high, as investors snapped up the metals on dollar weakness and firmer oil prices, analysts said.

Expectations of a further rate reduction by the US Federal Reserve after hefty emergency cuts this week also boosted market sentiment, they added.

Spot gold hit a high of $902.90 an ounce and was quoted at $900.60/$901.30 at 1333 GMT, against $884.75/$885.45 late in New York on Wednesday and this week's three-week trough below $850. It hit a record high of $914 on January 14.

Platinum jumped to a record high of $1,591.50 an ounce and was last quoted at $1,586/1,591, against $1,551.50/1,556.50 in New York, after Lonmin, the world's No.3 platinum producer, cut its sales outlook for the year.

Frederic Panizzutti, analyst at MKS Finance, said the bullion market saw good long liquidation on the way down in past days as people took profits and balanced their portfolios against other assets that decreased in value.

Covering positions

"Those positions had to be covered. That's what is going on now. Some buyers came in and started to buy back and everybody realised that we have to take the train at the right time."

"The dollar remains an important factor. There is a lack of confidence, there is still risk in the financial markets and people are definitely willing to go for something safer in their portfolios and gold looks to be that asset again."

The euro strengthened against the dollar after tough talk on inflation from European Central Bank policymaker Axel Weber dampened expectations of a possible near-term interest rate cut.

The euro had come under selling pressure in recent weeks as signs emerged that weakness in the US economy is having a knock-on effect on the euro zone.

A weaker dollar makes gold cheaper for holders of other currencies and often lifts bullion demand.