Precious metals were in favour on Friday as platinum hit a record high of $1 409 an ounce and gold hovered near 28-year peaks despite the dollar snapping a losing streak.

Platinum, used mainly in jewellery and auto production, took off yesterday as speculators bought amid worries over supply.

Two smelters at Anglo Platinum, the world’s biggest producer of platinum, were affected by power outages in SA, the firm said.

It also got a boost from a surge in gold prices yesterday due to dollar weakness, firm oil and strong technical daily chart support.

Worries over supply due to power outages in key producer SA bolstered expectations for fresh platinum highs, but dealers said it might be hard to sustain prices north of $1 400.

“We think platinum may have done enough for now. People have got excited with the power cuts, strikes and everything else but its probably not sustainable,” Simon Weeks

“We’d expect it to pull back to around the $1 375 area,” he added.

By midday, spot platinum was quoted at $1 400/1 404 an ounce, having hit a record $1 409 earlier, compared with $1 407/1 412 quoted late in New York yesterday.

Spot gold stood at $747,10/747,90 per troy ounce compared with $750,40/751,20 in late New York yesterday, when it rose as high as $753,60 - its highest since January 1980.

Gold lost a little of its lustre as the dollar severed a three-day losing run versus the euro.

A firmer US currency makes dollar-priced gold dearer for non-US buyers, but with one 50-basis point easing under the Federal Reserve’s belt and another rate cut likely before year-end, bullion could gather momentum for another rally.

Further clues on the likely timing of the next US rate cut may come from retail sales and producer prices data later on Friday.

Economists expect retail sales to have risen 0,2% in September, following a 0,3% increase in August. Excluding cars, sales are expected to pick up 0,3%.

In other bullion markets, COMEX gold futures eased, with the most active December contract at $752,70 an ounce, down $4,3, or 0,7%, from the New York settlement.

Benchmark August Tokyo Commodity Exchange gold reached its highest in over 22 years and key TOCOM platinum futures surged to a record high.

The August TOCOM gold contract closed up ¥4, or 0,1%, at 2 840 yen a gram. It peaked at 2 858 yen — the highest for any benchmark since March 1985.

TOCOM platinum closed up ¥24 or 0,5%, at 5 193 yen, after hitting a record high of 5 222 yen.

Analysts said the longer-term outlook for gold was bright, with fresh investment money flowing into the market as portfolio managers look to hedge against inflationary worries.

A return of stability to financial markets could also give investment funds seeking higher returns more room to invest in non-conventional asset classes such as gold, platinum and other commodities.

Investment bank Morgan Stanley said on Friday it was introducing its 2008 gold price forecast at $800 per ounce and expected the metal to benefit from strong global growth and spreading inflation problems.

“In particular, two themes have been very supportive: global growth remains strong, while inflation problems seem to be spreading,” the bank said in a research note.

Palladium failed to impress, compared with sister metal platinum, falling to $374/378 an ounce from $377/381 in New York.

Silver firmed to $13,78/13,83 an ounce from $13,73/13,78 late in New York yesterday.