Platinum hits record high, gold near 25-year peak
9/5/2006 Sydney, Australia

(Updates with quotes, prices; pvs Singapore)

By Atul Prakash

LONDON, May 9 (Reuters) - Platinum prices set a new record on Tuesday on strong industrial demand and continued speculative buying, while gold paused for a breather after hitting a 25-year high the previous day.

Investors bet on platinum ahead of the Platinum Week in London starting May 15. Johnson Matthey (JMAT.L), the world's top distributer of the metal, will release its widely-circulated report during the week on market fundamentals and price trends.

Wolfgang Wrzesniok-Rossbach, head of precious metals marketing at Germany's Heraeus, said the price movement was driven by robust demand for platinum in industries such as automobiles, glass and chemicals.

"The market seems well supported. In the long run, this is going to change but for the time being, it's not the moment to fight the bulls," he said.

Platinum (XPT=) was quoted at $1,207/1,212 an ounce by 1005 GMT, up from $1,186/1,191 late in New York on Monday. The metal has jumped 25 percent this year.

The metal's major industrial use is in autocatalysts, particularly in diesel vehicles, as it helps cleanse environmentally damaging fumes from motor exhausts. Platinum is also used in making jewellery and in one type of environmentally friendly fuel cell, a device for generating electric power using hydrogen and oxygen.

Demand was expected to get further boost from jewellers in China and Japan, who would gradually enter the market to meet demand during the summer months, dealers said.

"We believe that platinum has a more fundamental underpin than gold, silver or palladium," said John Reade, precious metals analyst at UBS Investment Bank.

"While there is undoubtedly investor and speculative long positions in platinum, the market remains in a fundamental deficit and should remain so for the foreseeable future," he said in a daily report.

GOLD PAUSES

Gold was relatively quiet, with prices hovering in a range of $5 an ounce, compared with about $15 in the past trading sessions.

Spot gold (XAU=) was quoted at $679.50/680.50 an ounce, up from $677.90/678.90 late in New York, when it rose as high as $684.70. But dealers said the metal was poised to rebound again after a short period of consolidation.

Bullion soared to an all-time high of $850 in 1980.

The physical sector saw some buying, mainly from Thailand, where the poor performance of the country's stock markets have prompted heavy demand for gold in recent months.

"It's picking up. I would say it's mostly investment demand from Thailand," said a dealer in Singapore, a centre for bullion trading in Southeast Asia.

In other precious metals, silver (XAG=) rose to $13.82/13.92 an ounce from $13.78/13.88 in New York, while palladium (XPD=) was at $375/379 an ounce, versus $370/375. (Additional reporting by Lewa Pardomuan in Singapore)