Platinum futures settled at their highest level since September after the second-largest producer of the metal flagged lower deliveries, while gold set a high for the year in a late-afternoon rally.

The most-actively traded platinum contract, for April delivery, settled $35.90, or 2.1%, higher at $1,720.80 a troy ounce on the New York Mercantile Exchange.

The white metal extended its rally for a second session after Impala Platinum Holdings Ltd. (IMP.JO), which accounts for about 25% of global platinum output, warned customers that deliveries could be halved in April due to a protracted strike at its largest mine. The labor dispute at the Rustenburg mine in South Africa has stalled output and resulted in more than 80,000 troy ounces of lost production so far.

"It continues to drag on and they're now looking at true stockpile drawdowns and supply issues," said Frank McGhee, head precious-metals dealer at Integrated Brokerage Services in Chicago.

Impala said it is losing about 20,000 ounces a week while mining operations remain stopped. Impala is second in output to Anglo American Platinum Ltd. (AMS.JO), which produces about 40% of the world's output.

Platinum's rally is helping the white metal close the price gap with gold. Platinum is rarer and more expensive to produce than gold but has traded at a discount since September, when fears about the slowing economy sapped demand for the metal, which is widely used in auto catalysts.

But platinum's recent gains have helped to narrow the price difference with its yellow cousin to around $50 in gold's favor Wednesday, from around $220 in December, when the gap between the two was at its widest.

"As long as there are labor issues [in South Africa] and as long as they have continuing power concerns, it's going to be very bullish for platinum and, to a lesser extent, palladium," said Graham Leighton, director of precious-metals trading at Newedge.

Constrained electricity supply in South Africa, which accounts for about 80% of global platinum output, has been another area for concern for platinum users.

Palladium and platinum are often found and mined together, so production disruptions tend to affect the price of both metals. Nymex palladium for March delivery also ended at a five-month high, settling at $717.75 a troy ounce, up $7, or 1%.

Meanwhile, gold touched $1,774.20 a troy ounce, the highest level this year. The most-active contract, for April delivery, settled at $1,771.30 a troy ounce, up $12.80, or 0.7%, on the day. This was the highest settlement price since Nov. 16.

Gold for February delivery rose $12.90, or 0.7%, to settle at $1,770 a troy ounce.

Gold's gains came in the final 30 minutes of trading, as the metal's steady push higher triggered automatic buying by traders who follow technical market indicators.

"There's no external influence for it, which leaves internal technicals in the gold market. Everyone's jumping on the momentum trade," McGhee said.

"Absolutely nothing else budged. It's all fund buying all hitting at the same time," he said.

Gold futures have struggled to climb back above $1,750 in recent weeks, since peaking above that mark in February.

"There's major support that's formed" under the gold price, said Bob Haberkorn, senior commodity broker with RJO Futures. "We've convincingly traded through $1,750. It's showing [that] traders and investors out there are basically going into safety."

 
Settlements (ranges include open-outcry and electronic trading): 
London PM Gold Fix: $1,752.00; previous PM $1,748.00 
Apr gold $1,771.30, up $12.80; Range $1,750.70-$1,783.40 
Mar silver $34.254, down 17.5 cents; Range $33.900-$34.495 
Apr platinum $1,720.80, up $35.90; Range $1,689.00-$1,729.00 
Mar palladium $717.75, up $7.00; Range $708.25-$724.40

-By Tatyana Shumsky, Dow Jones Newswires; 212-416-3095; tatyana.shumsky@dowjones.com

--Matt Day and Devon Maylie contributed to this article.

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