NEW YORK, Feb 14 (Reuters) - New York platinum futuresfirmly 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 concernsafter crude oil resumed a rally toward $100 a barrel as energyprices rose sharply on supply worries.
Carlos Sanchez, associate director of research with CPMGroup in New York, said that the South Africa news promptedplatinum's end users -- including automakers, jewelers as wellas investors from banks to exchange-traded funds -- to scramblefor the metal, bidding up prices in an already tight market.
"All along, there has been strong investment demand forplatinum. There's been strong industrial and fabrication demandbecause of the autocatalyst sector and the rising production ofautomobiles in the developing countries. I think we are stillheading higher," Sanchez said.
At 10:43 a.m. EST (1543 GMT), the active NYMEX platinumcontract for April delivery PLJ8 was up $21.30, or 1.1percent, to $2,005 an ounce, after hitting a record high of$2,030.60 in overnight trade. Spot platinum fetched$1,997/2,007.
South Africa's state power firm set out plans on Thursdayto address crippling shortages, saying it would increase coalpurchases and buy back electricity from those industrial usersable to reduce their consumption.
Since early January, South Africa has been hit hard bypower cuts that forced mines to shut for five days last monthas well as stoking public anger, sending the rand sharply lowerand weakening investor confidence in Africa's biggest economy.
Platinum's major industrial use is in catalysts,particularly in diesel vehicle catalysts, as it helps cleanenvironmentally damaging fumes from motor exhausts. Itspopularity in jewelry has expanded in recent years, especiallyin China.
The April contract has now rocketed more than $500, or 35percent, after hitting a bottom of $1,506.10 on Jan 22.
For sister-metal palladium, the NYMEX March contract PAH8gained $1.95 to $441 an ounce. Spot palladium fetched$435/439.
GOLD TURNS HIGHER
Platinum's rally and strengthened crude oil prices boostedgold futures on Thursday.
The gold contract for April delivery at the COMEX divisionof 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 ahedge against inflation. U.S. crude futures CLc1 rallied $2to trade above $95 a barrel by midmorning.
Sanchez said that gold pulled back recently because oflower flight-to-quality demand as the financial and economicconcerns of the U.S. economy had temporarily disappeared.
"People are still seeing gold as a safe haven and as ahedge against a volatile stock market, volatile currencymarkets, and a hedge against economic and financialuncertainties," Sanchez said.
Spot gold was quoted at $910.80/911.70, versusWednesday's New York close of $906.70/907.50. London bulliondealers fixed the afternoon spot price at $906.00.
COMEX March silver SIH8 was up 5.70 cents at $17.410 anounce, trading between $17.150 and $17.520.
Spot silver was at $17.37/17.42, compared with itslast Wednesday quote of $17.28/17.33. London silver was fixedat $17.26. CAPITAL GOLD GROUP, GOLD, GOLD PRICES, PLATINUM, SPOT GOLD, SPOT SILVER, SAFE HAVEN, HEDGE
