Supply fears push platinum to 23-year high
news.ft.com By Nerma Jelacic in London Published: February 3 2003 12:11 | Last Updated: February 3 2003 17:22
Platinum hit a 23-year high on Monday buoyed by speculative and fund buying while supply fears continued to support the precious metal.
The commodity, used in autocatalysts and jewellery, has risen about 14 per cent so far this year as the demand remained high.
Last week platinum was boosted further by George W Bush's State of the Union speech in which the US president called for greater research into fuel-cell technology, which relies on platinum.
But the biggest catalyst for platinum's rise has been fear of supply shortage amid possibility of industrial action at Russia's Norilsk Nickel, the world's fifth-largest producer of the metal.
At 1720 GMT platinum was trading at $697 an ounce having earlier hit a high of $701 an ounce - its highest level since March 1980.
But analysts were unsure about the metal's ability to sustain the recent gains. "Platinum looks increasingly vulnerable to a pull back after the recent rally. At the margin dollar weakness will help... but to a lesser degree than has been apparent in the gold market," said Andy Maag, precious metals analyst with UBS Warburg.
Gold remained near its six-year highs in quiet trade as investors looked ahead to US Secretary of State Colin Powell's visit to the UN Security Council on Wednesday in which he is expected to offer proof that Iraq has not disarmed.
The commodity was trading at $370.40 an ounce in late afternoon trade in London off its high of $371.60 an ounce. Investors were also put off the precious metal by a rally in the US dollar.
The currency rose to its best level this year against the yen and also pushed the euro lower ahead of the release of some key economic data later on Monday.
"The closer we are getting to the testimony of Colin Powell the more reluctant speculators will be in taking positions. The euro will dictate the market within this range," said Mr Maag.
Brent crude prices fell on Monday after the Venezuelan opposition declared an end to the 63-day general strike that has crippled oil production in the world's fifth largest exporter.
Brent crude for March delivery was 42 cents lower at $30.68 per barrel off the previous session's fix of $31.10 per barrel.
But there was uncertainty surrounding the declaration after executives said stoppages will continue in the oil industry. Exports from the South American country have increased in recent weeks as supporters of president Chavez worked to keep the country's oil terminals open but exports remain at about half of the pre-strike levels.
Comments from oil ministers at Opec's oil conference over the weekend added pressure on the commodity. Ministers expressed their concern that the oil market could become oversupplied adding that Venezuela's return to full-scale production could see 4m barrels per day or more floating.