Platinum extends lead over gold; at a 16-month high

Tags: Commodities
Platinum climbed to a 16-month high in London, extending its premium over gold, as investor holdings reached a record on concern that supplies will fall from mines in South Africa, which account for about 73 per cent of global production.

Holdings in exchange traded-products backed by platinum expanded 1 per cent to a record 51.5 tonnes on Tuesday, data compiled by Bloomberg show. The platinum industry is in crisis, Anglo American chief executive officer Cynthia Carroll said on Tuesday. The company’s platinum unit, the largest producer, last month proposed the halt of four mine shafts that would cut about 7 per cent of global production.

“That’s going to put some pressure on above-ground stocks and scrap supply and it’s going to add to the mine-supply deficit,” Nick Trevethan, an analyst at Australia & New Zealand Banking Group, said by phone from Singapore. Platinum output will drop 2.7 per cent this year, leaving a 256,000-ounce shortage, Barclays estimates.

Platinum for immediate delivery rose 1.2 per cent to $1,730.15 per troy ounce by 10:01 am in London. In earlier trade it rose to $1,736.07, the highest price since September 22, 2011. Prices are up for a fourth consecutive day. Futures for delivery in April gained 1.4 per cent to $1,730.60 on the New York Mercantile Exchange.

Palladium rose 0.3 per cent to $768.22 per troy ounce, after reaching $769.30, the highest since September 5, 2011. The metal is typically found alongside platinum and both are mostly used in pollution-control devices in cars.

One ounce of platinum bought as many as 1.0287 ounces of gold on Wednesday, the most since August 2011, according to data compiled by Bloomberg. Platinum gained 12 per cent this year on mounting confidence nations from China to the US are leading a global economic recovery. Gold fell 0.3 per cent this year.

Gold for immediate delivery lost 0.1 per cent to $1,670.95 per troy ounce in London on Wednesday. Gold futures for April delivery fell 0.1 per cent to $1,671.60 per troy ounce on the Comex in New York.

Imports of gold into mainland China from Hong Kong rose 94 per cent to a record last year. Mainland China imported 834,502 kg (834.5 tonnes), including scrap and coins, up from about 431,215 kg in 2011, Bloomberg calculations based on data on Tuesday from the Census and Statistics Department of the Hong Kong government show.

The import data, alongside “persistently strong” volumes on the Shanghai Gold Exchange and elevated premiums in the past couple of weeks, indicate a “robust demand story” in China, UBS said in a report on Wednesday.

“This strength can be mainly attributed to seasonal factors, with the start of the Lunar New Year holidays only a few days away,” London-based UBS analyst Joni Teves wrote in the report.

Silver fell 0.4 per cent to $31.6875 per troy ounce in London.

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