/ 4 March 2008

Platinum strikes record; gold near all-time high

Platinum struck a record for the second straight day on Tuesday, catching up with gold as a weaker United States dollar and persistent supply problems in South Africa ignited buying from speculators and investors.

Platinum’s gains pushed up sister metal palladium to a six-and-a-half year high. Gold was near an historical high hit the previous day and on track to touch $1 000 an ounce on expectations of further US interest-rate cuts and record high crude oil.

Spot platinum hit a high of $2 243 an ounce, surpassing Monday’s top of $2 230 an ounce, and up from $2 230/2 237 an ounce late in New York.

”Platinum will be trying the $2 500 mark. It won’t be surprising to see investors continue to buy platinum,” said William Kwan, a dealer at Phillip Futures in Singapore.

Platinum, used in jewellery and auto catalysts to clean exhaust fumes, has risen more than 40% in 2008 as problems with power supply, which disrupted mining in main producer South Africa, triggered supply fears and sparked speculative buying. The most active Tokyo platinum futures, currently February 2009, hit the daily 300 yen limit at 7 274 yen per gram. It was later quoted 260 yen higher at 7 234 yen.

Gold hit a bid high of $987 an ounce, up from $981,20/982 late in New York, within sight of Monday’s all-time high of $989,30 an ounce.

”Gold is being pushed up by the general bullish sentiment across commodities. All hedge funds are buying the market up. They are increasing their long positions,” he said.

”There’s a possibility before the FOMC [Federal Open Market Committee] the market may price in an aggressive rate cut, and push up the price to above $1 000,” said Kwan.

The US Federal Reserve’s Federal Open Market Committee holds a one-day meeting on interest rates on March 18. Short-term interest-rate futures showed about a 75% perceived chance of the Fed lowering its benchmark overnight lending rate by 75 basis points at its next meeting.

In theory, lower interest rates elevate gold’s appeal as an alternative investment. — Reuters