Platinum Poised for Second Weekly Gain, Fifth Monthly Increase
By Glenys Sim
March 27 (Bloomberg) -- Platinum headed for its second weekly increase and fifth monthly gain, on investors’ optimism that a rally in equities worldwide may signal a rebound in the global economy, improving the demand outlook for the metal.
Platinum, used mainly in automobile pollution-control devices and jewelry, has gained 2.7 percent this week as the Standard & Poor’s 500 Index rallied 8.4 percent and the Dow Jones Industrial Average surged 8.9 percent.
“Platinum group metal prices jumped in part on a more favorable outlook for platinum jewelry demand,” James Steel, an analyst at HSBC Securities, wrote in a note e-mailed today. “Based on our conversations with jewelers and merchants, we believe that platinum jewelry demand has risen recently as low prices have attracted new buyers.”
Platinum for immediate delivery rose as much as 0.4 percent to $1,151.75 an ounce, and traded at $1,145 at 2:52 p.m. Singapore time, up 6.7 percent for the month. The metal rose to $1,163.50 an ounce yesterday, the highest since Sept. 26. Palladium added 0.6 percent to $223 an ounce, after rising to $226.25 yesterday, the highest since Nov. 10.
Platinum is on track for the best quarter in a year, up 23 percent, as consumers buy the metal as an alternative to gold. Platinum’s premium to gold stood at $213.15 an ounce yesterday, compared with $1,041.83 a year ago, according to Bloomberg data.
“The relatively narrow price premium between platinum and gold has encouraged some consumers to shift to platinum jewelry at the expense of gold jewelry,” Steel wrote.
Deutsche Bank AG today raised its platinum 2009 price forecast by 7.2 percent to $1,086 an ounce.
“Although autocatalytic demand is collapsing along with the world economy, we would caution that jewelry demand could remain relatively robust given the recent correction in price,” Johannesburg-based analyst Gary Pearson wrote in the Deutsche Bank quarterly commodities report.
“The platinum market balance is expected to shift from a deficit in 2008 to market surplus in 2009, however we do not expect market surpluses in platinum to be large,” Pearson added.
To contact the reporter on this story: Glenys Sim in Singapore at gsim4@bloomberg.net
Last Updated: March 27, 2009 03:45 EDT
