April 17 (Bloomberg) -- Platinum climbed to the highest in almost five weeks and gold rose in London on speculation power shortages in South Africa will curb growth in supply as demand for the precious metals increases.

The nation may suffer a deficit of electricity for seven years, state-owned utility Eskom Holdings Ltd. said yesterday. South Africa supplies 78 percent of the world's platinum, and is also the second-biggest producer of gold.

``It's becoming more and more difficult to get gold and platinum out of the ground fast enough'' to meet demand, said Walter de Wet, head of commodities research at Standard Bank Group Ltd. in Johannesburg. ``It's getting more expensive to generate electricity. There is a capacity shortage.''

Platinum for immediate delivery advanced $34.50, or 1.7 percent, to $2,057 an ounce by 12:05 p.m. in London. A close at that level would be the highest since March 14. Gold rose $3.02, or 0.3 percent, to $947.61, the highest since March 26.

Platinum has rallied 35 percent this year, the most of any precious metal, and gold is up 13 percent.

Investment demand for the metals as a currency hedge has risen on prospects the dollar will extend losses, while tighter rules on auto pollution will increase the use of platinum in catalysts for removing toxins from exhaust fumes, de Wet said.

Platinum held in London-listed exchange-traded funds managed by ETF Securities Ltd. rose 0.6 percent to 345,407 ounces from a week ago, and gold assets gained 1.6 percent to 1.083 million ounces.

Gold at $1,000

Gold will advance to $1,000 an ounce this year, buoyed by a weaker dollar, said Societe Generale analyst Stephen Briggs. Bullion traded at record $1,032.70 an ounce March 17.

``The dollar will still be the single biggest driver,'' Briggs told reporters at a presentation in London yesterday. The Paris-based bank expects the dollar to drop to as low as $1.62 against the euro by June, he said. The dollar fell to a record low of $1.5979 against the euro yesterday.

Crude also rose to a record in New York, adding to prospects of faster inflation and reducing the likelihood that the European Central Bank will cut interest rates. European key rates are 1.75 percentage points higher than in the U.S.

``Continued dollar weakess as well as inflationary concerns on the back of record oil prices should continue to support gold's upward momentum,'' Barclays Capital analysts led by Kevin Norrish said today in a daily report.

Gold for June delivery rose $2.20 to $950.50 an ounce in electronic trade on the Comex division of the New York Mercantile Exchange. Palladium for immediate delivery added $3.50 to $457.50 an ounce in London, for an annual gain of 22 percent. Silver rose 27 cents, or 1.5 percent, to $18.585.

To contact the reporter on this story: Chanyaporn Chanjaroen in London at cchanjaroen@bloomberg.net

Last Updated: April 17, 2008 07:22 EDT