Singapore: Platinum struck a record for the second straight day on Tuesday, catching up with gold as a weaker US dollar and persistent supply problems in South Africa ignited buying from speculators and investors. Platinum’s gains pushed up sister metal palladium to a 6-1/2-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 $981.20/982.00 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, 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 18 March. 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.
The dollar’s trade-weighted index against six major currencies was 73.701. It hit 73.354 on Monday, its lowest level since the index was created in 1973.
“Prices beyond $1,000 seem inevitable, but beyond this psychological figure, price sustainability would be a key issue,” said Pradeep Unni, an analyst at Vision Commodities in Dubai.
“Retail demand has hit rock bottom and this is a bad signal for the long-term bull market. For the moment, immediate resistance is likely around $992 and $1,004,” he said.
The physical sector slowed to a trickle in Singapore on Tuesday after jewellers in Indonesia and Thailand cashed in their holdings the previous day to take advantage of record-high prices.
“I think there will be initial selling by jewellers when the price hits $1,000. But I am not sure if they will sell in huge quantity because after all, they haven’t bought a lot lately,” said a dealer in Singapore.
Premiums for gold bars were on par to the spot London price in Singapore, unchanged from last week.
Gold futures for April delivery on the COMEX division of the New York Mercantile Exchange fell $2.2 an ounce to $982.0 an ounce - off its record high of $992.00 hit Monday.
Spot palladium rose as high as $588 an ounce, its highest in more than six years, up from $576/580 late in New York.
Silver edged down to $20.17/20.22 an ounce from $20.27/20.32 an ounce, having reached a 27-year peak of $20.60 an ounce on Monday.