Platinum on a roll, prices jump by 16% to $1,105/oz
DEEPA KRISHNAN
www.economictimes.indiatimes.com
MUMBAI: The sheen of gold and silver has rubbed off on platinum as well. The precious white metal has seen a surge of over 16% from last year’s levels of $950 per ounce, to current levels of $1,105, on increasing demand both from India and around the world in the past year.
The metal saw a huge jump in the price in November to $1,350, the biggest gain in a day in over two decades on rumours that an exchange traded fund (ETF) is about to be launched in Platinum. On Nymex in New York, the metal closed at $1,288 on November 21, before it witnessed a healthy correction of over $100 in the last two weeks. Analysts indicate that the price is poised for good gains in 2007, as over and above the expected increase in demand for platinum if ETFs do hit the counter, consumer and industrial demand for the metal is looking brighter than ever before.
Currently, platinum has been trading within a range. On Nymex, technical charts show that one has to look out for a resistance level of $1,140 to reap further gains and a support level of $1,100, said an analyst from Man Financial. Funds are low-key during December as they lock-in profits and close their positions, in order to start afresh in the next year.
According to metals consultancy GFMS, as most precious metals essentially track gold, if the yellow metal touches $700 levels in January, then platinum along with other platinum group metals would also climb.
On the supply side, the mine production in platinum is looking up, albeit more slowly than anticipated in previous years. Supplies have been rising since 2000, with South Africa accounting for the large portion of the increase. The supply was up 4% in the year at 7.48 m ounces. In spite of this the price was up as the market is driven by demand that is growing at a faster pace. Production of platinum is about 5% that of gold, which makes it twice as expensive as the yellow metal.
Yet in India, according to a report by Johnson Matthey, the world’s largest fabricator and distributor of platinum group metals, the demand for platinum on the jewellery side has tripled in the last few years.
Platinum also has great demand in the automotive industry (45%) as it an active element in the catalytic converters. Jewellery comes second at 30%. It finds use in other industries as varied as electrical and chemical, and petroleum refining.
