Platinum Rises on Investment, Industrial Demand; Gold Is Steady

By Nicholas Larkin and Kim Kyoungwha

Jan. 12 (Bloomberg) -- Platinum and palladium climbed to the highest prices in at least 17 months in London on speculation investment and industrial demand will increase. Gold was little changed near a one-month high.

Platinum futures headed for the longest rally in more than two years after the introduction of exchange-traded funds linked to platinum and palladium in the U.S. and as data showed China replaced the U.S. as the world’s largest auto market. Automakers account for about half of platinum consumption.

“If you have new ETFs offered in a region it is positive” and Americans “have already been strong buyers of gold ETFs,” said Peter Fertig, owner of Quantitative Commodity Research Ltd. in Hainburg, Germany. Higher prices are also “related to figures from the car industry.”

Platinum for immediate delivery rose as much as 2.3 percent to $1,627.38 an ounce, the highest price since August 2008, and traded at $1,616.63 at 10:08 a.m. local time. Palladium added 0.4 percent to $435.80 after reaching $443.38, the highest price in almost 18 months. Platinum futures on the New York Mercantile Exchange’s Comex division rose 1.6 percent, an eighth consecutive increase.

Gold for immediate delivery added $2.35, or 0.2 percent, to $1,154.20 an ounce. Gold for February delivery rose 0.2 percent to $1,154.20 an ounce on Comex.

“Gold really depends on how the dollar behaves,” Peter Tse, head of precious metals at Bank of Nova Scotia in Hong Kong, said today. “Gold still lacks momentum to go anywhere, closely following the track of the U.S. dollar.”

Inflation Threat

The U.S. Dollar Index, a gauge of the U.S. currency versus six major trading partners, yesterday fell to the lowest level since Dec. 16 and was up 0.1 percent today. Gold rose 24 percent last year as investors sought to protect their wealth against a declining dollar and inflation threat.

China’s sales of passenger cars, buses and trucks rose 46 percent to 13.6 million last year, the fastest pace in at least 10 years, the China Association of Automobile Manufacturers said yesterday. In the U.S., sales slumped 21 percent to 10.4 million, the fewest since 1982, according to Autodata Corp.

“Platinum group metals are a necessary component in construction of catalytic converters,” said James Steel, an analyst at HSBC Securities. “The prospect of a continued recovery in global auto demand this year is positive for platinum group metal prices.”

‘Significant Investor Interest’

The ETFS Platinum Trust and ETFS Palladium Trust started trading on the NYSE Arca stock exchange on Jan. 8, Bloomberg data show. The funds are backed by physical metal, according to notices published on the Web site of ETF Securities Ltd. The introduction of funds linked to the metals is expected to encourage “significant investor interest,” according to Standard Chartered Plc’s metals analyst Dan Smith.

Silver for immediate delivery in London added 0.5 percent to $18.65 an ounce. Ruthenium, used mostly for coating computer hard disks, yesterday jumped to the highest price since Dec. 11. It was unchanged at $170 an ounce today, according to prices from Johnson Matthey Plc on Bloomberg.

Platinum will average $1,650 an ounce this year, 18 percent more than a previous estimate, Deutsche Bank AG said in a report dated yesterday. The bank raised its palladium forecast 38 percent to $444 an ounce and increased its rhodium estimate 37 percent to $2,725 an ounce.

To contact the reporters on this story: Nicholas Larkin in London at nlarkin1@bloomberg.net; Kyoungwha Kim in Singapore at Kkim19@bloomberg.net.