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Platinum rose for a fifth day in a row on Tuesday, its longest stretch of gains since October, pushing the price above that of gold for the first time in six months, while gold fell below $1,700 an ounce before a US rate decision.
The price of platinum has gained more than 20 percent so far this year, propelled by supply disruptions in South Africa, the world's largest producer, where safety stoppages and illegal strike action at a major mine have eroded output.
Spot platinum was bid up 0.1 percent at $1,687.50 an ounce by 1505 GMT. Spot gold was bid at $1,686.30 an ounce, down 0.75 percent on the day, pressured by strong U.S. consumer spending figures, but still up 0.7 percent in the last week.
"We have been ragingly bullish on platinum this year. We perhaps got in a tiny bit too early, but this is one we have been plugging very strongly," Nic Brown, head of commodity strategy at Natixis said.
"We think the fundamentals of platinum are much better than gold's fundamentals," Brown said. Industrial demand for platinum from the European auto market is likely to be lacklustre, but jewellery demand in consuming nations such as Japan and China could help offset that, he added.
Much of the boost to the platinum price this year has come from a month-long stoppage at world number two producer Impala Platinum's largest facility at Rustenburg, which the company said cost nearly 200,000 ounces in production and would probably cut deliveries in April by up to 50 percent.
A government crackdown on safety in mines that started in the later stages of 2011 also led to sharp decreases in output at some of Impala's major rivals such as Anglo Platinum , Aquarius and Lonmin.
The demand side of the platinum market is less rosy. Platinum relies most heavily on the European auto market for consumption, where it is used in catalytic converters in diesel-powered vehicles and where the euro zone debt crisis threatens to push the entire region into recession.
Speculators have turned more bullish on platinum this year, with their holdings of US platinum futures rising by nearly 50 percent since the end of last year to their highest in six months, compared with a rise of about 25 percent in speculative holdings of gold futures.
FED FOCUS
The key event risk for financial markets later on Tuesday is expected to be a decision on US monetary policy from the Federal Reserve, which is expected to signal it will keep benchmark rates unchanged near zero, but is unlikely to indicate, one way or another, its intentions to use additional policy measures to further stimulate economic growth.
The markets have already priced in a waning chance of the Fed indicating that it stands ready to add extra liquidity to the financial system via government bond purchases, or quantitative easing (QE), which aims to keep interest rates low and curbs the dollar's strength.
Gold has more than doubled in price since the Fed unveiled its first round of QE in late 2008. "The market is still going to be looking for any kind of signs. We are not sure it's going to get any," Tobias Merath, an analyst at Credit Suisse Private Banking said.
"Our view for a little while has been with the Fed's new policy of indicating where interest rates are going, that allows it to influence the shape of the yield curve, without the need of heavy-handed measures like QE. We would be surprised if there were to be anything for the gold market to get optimstic about," he said.
A US government report that showed consumer spending rising at its fastest pace in five months in February lifted the dollar and raised expectations for the Fed not to signal the use of extra measures to encourage growth. The rise in the dollar against a basket of currencies posed a further headwind to gold, which tends to come under pressure as non-US investors sell their bullion holdings to book a higher profit in their own currencies.
Even with the prospect of no more QE to sustain any major gold rallies, investors have maintained their interest in the metal, as evidenced by the rise in global holdings of gold in exchange-traded products to record highs this week.
The amount of metal held by the major ETPs reached 70.887 million ounces by the close of trade on Monday, having risen by 361,000 ounces so far in March, marking the third straight month of expansion in holdings. In other precious metals, silver was down 0.8 percent on the day at $33.32 an ounce, while palladium was up 0.1 percent at $696.72 an ounce.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
Platinum rose for a fifth day in a row on Tuesday, its longest stretch of gains since October, pushing the price above that of gold for the first time in six months, while gold fell below $1,700 an ounce before a US rate decision.
The price of platinum has gained more than 20 percent so far this year, propelled by supply disruptions in South Africa, the world's largest producer, where safety stoppages and illegal strike action at a major mine have eroded output.
Spot platinum was bid up 0.1 percent at $1,687.50 an ounce by 1505 GMT. Spot gold was bid at $1,686.30 an ounce, down 0.75 percent on the day, pressured by strong U.S. consumer spending figures, but still up 0.7 percent in the last week.
"We have been ragingly bullish on platinum this year. We perhaps got in a tiny bit too early, but this is one we have been plugging very strongly," Nic Brown, head of commodity strategy at Natixis said.
"We think the fundamentals of platinum are much better than gold's fundamentals," Brown said. Industrial demand for platinum from the European auto market is likely to be lacklustre, but jewellery demand in consuming nations such as Japan and China could help offset that, he added.
Much of the boost to the platinum price this year has come from a month-long stoppage at world number two producer Impala Platinum's largest facility at Rustenburg, which the company said cost nearly 200,000 ounces in production and would probably cut deliveries in April by up to 50 percent.
A government crackdown on safety in mines that started in the later stages of 2011 also led to sharp decreases in output at some of Impala's major rivals such as Anglo Platinum , Aquarius and Lonmin.
The demand side of the platinum market is less rosy. Platinum relies most heavily on the European auto market for consumption, where it is used in catalytic converters in diesel-powered vehicles and where the euro zone debt crisis threatens to push the entire region into recession.
Speculators have turned more bullish on platinum this year, with their holdings of US platinum futures rising by nearly 50 percent since the end of last year to their highest in six months, compared with a rise of about 25 percent in speculative holdings of gold futures.
FED FOCUS
The key event risk for financial markets later on Tuesday is expected to be a decision on US monetary policy from the Federal Reserve, which is expected to signal it will keep benchmark rates unchanged near zero, but is unlikely to indicate, one way or another, its intentions to use additional policy measures to further stimulate economic growth.
The markets have already priced in a waning chance of the Fed indicating that it stands ready to add extra liquidity to the financial system via government bond purchases, or quantitative easing (QE), which aims to keep interest rates low and curbs the dollar's strength.
Gold has more than doubled in price since the Fed unveiled its first round of QE in late 2008. "The market is still going to be looking for any kind of signs. We are not sure it's going to get any," Tobias Merath, an analyst at Credit Suisse Private Banking said.
"Our view for a little while has been with the Fed's new policy of indicating where interest rates are going, that allows it to influence the shape of the yield curve, without the need of heavy-handed measures like QE. We would be surprised if there were to be anything for the gold market to get optimstic about," he said.
A US government report that showed consumer spending rising at its fastest pace in five months in February lifted the dollar and raised expectations for the Fed not to signal the use of extra measures to encourage growth. The rise in the dollar against a basket of currencies posed a further headwind to gold, which tends to come under pressure as non-US investors sell their bullion holdings to book a higher profit in their own currencies.
Even with the prospect of no more QE to sustain any major gold rallies, investors have maintained their interest in the metal, as evidenced by the rise in global holdings of gold in exchange-traded products to record highs this week.
The amount of metal held by the major ETPs reached 70.887 million ounces by the close of trade on Monday, having risen by 361,000 ounces so far in March, marking the third straight month of expansion in holdings. In other precious metals, silver was down 0.8 percent on the day at $33.32 an ounce, while palladium was up 0.1 percent at $696.72 an ounce.
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