* PGMs rally on supply fears after 34 killed in mine clash
* Platinum hits 6-week high, largest weekly gain since Feb
* Gold flat on uncertainty over possible Fed stimulus
* Coming up: U.S. Chicago Fed national activity index Monday
By Frank Tang
NEW YORK, Aug 17 (Reuters) - Platinum group metals (PGMs)
rallied on Friday after deadly violence at a major South African
mine fuelled speculative buying amid expectations that supply
from the world's top platinum-producing country will decline
further.
Platinum rose more than 2 percent on the day and ended the
week up 5.5 percent, its biggest weekly gain since late
February. Palladium surged 4 percent for its largest one-day
rally since early July.
Platinum and palladium, however, remain sharply below their
highs set earlier this year. PGMs, used by the auto industry as
catalytic converters to clean exhaust fumes, have come under
heavy pressure as the European debt crisis and global economic
slowdown curbed car production.
Lonmin, the world's No. 3 platinum producer, said it
had so far lost six days of mined production, or about 15,000
ounces of platinum, since violence at its South African
operations began last Friday. The company said it was unlikely
to meet its full-year target at 0.75 million ounces.
South African police killed 34 strikers at its Marikana
platinum mine on Thursday.
The reduction in platinum supply due to the work stoppage
has so far seemed too small to drive prices higher, analysts
said. Global platinum output in 2011 was 6.5 million ounces.
"It's all about expectation as opposed to actual market
impact today," said Philip Newman, precious metals research
director at GFMS, referring to platinum's rise on Lonmin.
Spot platinum climbed 2.3 percent to $1,467.38 an
ounce by 2:26 p.m. EDT (1826 GMT), having hit a six-week high of
$1,469.40. Palladium was up 4.2 percent at $603.75 an
ounce.
Trading in U.S. NYMEX platinum futures neared 16,000 lots,
40 percent above its 30-day average, preliminary Reuters data
showed. Turnover in U.S. palladium was also higher than usual.
As South Africa is the source of around 75-80 percent of the
world's platinum, any supply disruption there is closely watched
for its impact on the market balance. Lonmin typically produces
around 2,000 ounces of platinum a day, or 60,000 ounces a month.
"Whether it is significantly tightening the market - at the
moment, probably not. But potentially, this could have quite a
long-term impact," Citigroup analyst David Wilson said.
Investors are also buying platinum due to its unusual
discount to gold. The gap between much-rarer platinum and gold
stood at $150 on Friday, sharply narrowing from a record of $230
set on Monday.
GOLD STEADIES
The price of gold, a traditional inflation hedge, flattened
on Friday on uncertainty over whether the U.S. Federal Reserve
and other central banks will use monetary stimulus to boost
economic growth.
Chances that the Fed will launch a third round of money
printing have risen slightly over the past month to 60 percent,
according to a Reuters poll that also showed economists lowering
economic growth expectations.
Spot gold edged up 30 cents at $1,614.60 an ounce. It
lost 0.3 percent on the week.
U.S. COMEX gold futures for December delivery settled
down 20 cents an ounce at $1,619.40, with trading volume more
than 50 percent below its 30-day moving average.
Spot silver eased 0.6 percent at $28 an ounce.
2:26 PM EDT LAST/ NET PCT LOW HIGH CURRENT
SETTLE CHNG CHNG VOL
US Gold DEC 1619.40 0.20 0.0 1613.30 1623.00 69,728
US Silver SEP 28.002 -0.210 -0.7 27.960 28.290 22,602
US Plat OCT 1473.10 37.90 2.6 1435.50 1475.00 14,688
US Pall SEP 605.10 21.65 3.7 582.90 608.80 5,010
Gold 1614.60 0.30 0.0 1612.28 1619.60
Silver 28.000 -0.180 -0.6 28.040 28.340
Platinum 1467.38 32.88 2.3 1440.50 1469.50
Palladium 603.75 24.55 4.2 585.00 605.25
TOTAL MARKET VOLUME 30-D ATM VOLATILITY
CURRENT 30D AVG 250D AVG CURRENT CHG
US Gold 74,379 158,167 186,154 16.68 -0.31
US Silver 27,348 40,011 56,500 23.2 0.35
US Platinum 15,913 11,465 9,529 21 -2.00
US Palladium 6,223 4,925 4,587
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