Singapore: Platinum, used in auto catalysts and jewellery, rallied 4% on Tuesday as speculators jumped into the market after a drop the previous day, while gold tracked oil’s fall from record highs.
Weaker gold attracted buying from jewellers and investors in Thailand but holders in Indonesia, Southeast Asia’s largest consumer, sold bullion to get cash after the rupiah hit a one-month low against the dollar.
Spot platinum hit a high of $2,060 an ounce, up from $1,980/1,990 late in New York on Monday, when it tumbled to its lowest in almost four weeks at $1,926 on news that miners in South Africa would get more power supply. Supply concerns triggered by mining disruptions in South Africa, the world’s main producer, propelled platinum to a record high of $2,290 an ounce on March 4. The metal has risen as much as 50% in 2008.
“Fundamentally, the platinum market is still driven by fears of tight supply. It’s difficult for us to expect miners to go back to full operation without enough power supply,” said a precious metals dealer in Tokyo.
“Investment demand is quite strong and I don’t think supply will catch up with demand. Of course, the price will go up quite fast, but profit taking will also happen because speculators want to enjoy a huge amount of profit,” he said.
South African power utility Eskom is in the process of restoring power to 95% of normal levels to the mining industry and will, following the same process, restore power in full eventually to all industrial consumers including mining companies, the power industry source said.
Analysts say the global platinum deficit could widen to 500,000 to 600,000 ounces by the end of 2008, compared with about 265,000 ounces in 2007. The market had a surplus of 65,000 ounces in 2006, following seven successive years of deficits.
“I think the market would need further downward correction before it can climb strongly again,” said Hisaaki Tasaka, analyst at Ace Koeki Co Ltd in Tokyo, adding that charts suggested the metal was still in downward corrective phase.
Gold slipped to $972.40/973.20 an ounce from $974.10/974.90 late in New York on Monday and remained below a record high of $991.90 an ounce hit on 6 March.
Gold struggled to sustain the uptrend after a failure to break through the $1,000 barrier last week. It has gone up as much as 19% in 2008, driven by record high oil and expectations of further interest rates cuts in the United States.
“The key resistance is currently at $992 and only on a breach of this level gold’s move beyond $1,000 can be confirmed,” said Pradeep Unni, analyst at Vision Commodities in Dubai.
“Alternatively, if gold slips below $970, then it could slide to $940 levels.”
Oil was steady below a record near $108 a barrel as investors sought a hedge against a weak dollarand inflation.
Gold futures for April deliveryon the COMEX division of the New York Mercantile Exchange rose $4.1 an ounce to $975.9.
The benchmark platinum futures contract for February delivery on the Tokyo Commodity Exchange fell 182 yen per gram to 6,525 yen, hit by a firming yen.
Silver edged down to $19.62/19.67 an ounce from $19.64/19.69. Spot palladium rose to $471/476 an ounce from $467/472 an ounce.