NEW YORK (Reuters) - Platinum rose almost 3 percent on Wednesday, its biggest one-day rally in a month, boosted by supply fears after sprawling labor unrest halted production at some mines in top platinum producer South Africa.
Gold was up by just pennies, retreating after hitting a six-month high during the session. Some investors scaled back their bullish bets before a Federal Reserve decision on Thursday about new economic stimulus.
Machete-wielding strikers forced No. 1 platinum producer Anglo American Platinum (AMSJ.J) to shut down some South African operations, widening the labor unrest sweeping the country's mines. South Africa has 80 percent of the world's platinum reserve.
The price of platinum, mostly used as an autocatalyst to clean auto emissions, has soared 11 percent in the last eight sessions. The metal's relative strength index (RSI) rose above 80 on Wednesday to its most overbought level since early 2008.
"Platinum's rally is very strike-specific at this point, and it may pull back when the supply worries are over, as platinum is now getting significantly overdone," said Frank McGhee, head precious metals trader Integrated Brokerage Services LLC.
Spot platinum rose 2.8 percent to $1,644.74 an ounce by 2:10 p.m. EDT (1810 GMT), its biggest one-day percentage gain since August 16. Wednesday's high of $1,654.49 marked its best level in five months.
U.S. NYMEX October platinum futures settled up $42.60 at $1,649.60 an ounce, with volume almost double its 250-day average, preliminary Reuters data showed.
Palladium rose 1.6 percent to $676.47 an ounce.
The price of platinum has risen nearly 20 percent since a strike at the world's third-largest producer, Lonmin (LMI.L), turned violent last month, leaving 44 dead and dozens injured in clashes between police and striking workers.
Despite rising supply fears in South Africa, a forecast surplus in platinum due to faltering demand from the European car industry could limit further price gains, analysts said.
"Prior to this, this was a market that was in surplus this year. It might move toward balance, but it's not a market that is going to be in a significant deficit this year," said David Jollie, analyst at Mitsui Precious Metals.
Gold retreated as some investors took profits after an 8.5 percent rally since August on hopes for new Fed stimulus.
A Reuters poll showed chances are increasing that the Fed will act on Thursday to energize a U.S. economy that is struggling to gain momentum in the face of a lackluster labor market and uncertain fiscal policy.
Spot gold inched up 6 cents to $1,731.34 an ounce, sharply below a session high of $1,746.20, which marked its loftiest level since February 29.
U.S. COMEX December futures settled down $1.20 at $1,733.70 an ounce, with volume heavier than usual, about 25 percent above its 30-day average.
Silver was down 0.8 percent at $33.22 an ounce. It has gained more than 9 percent in the last nine sessions.
"There isn't enough physical demand to sustain prices above $30, both from investors and fabricators," said Erica Rannestad, precious metals analyst at CPM Group.
Additional reporting by Amanda Cooper in London; Editing by David Gregorio