In the London market, platinum rose to historic highs of near $2200 an ounce, as supply problems in top producer South Africa triggered speculative buying.
Bullish market sentiment also helped gold to advance and trade near February 21 record high above $950 an ounce, but pared gains later in the day. Spot platinum jumped to a record high of $2,192 an ounce before falling to $2,135/2,145 an ounce on February 22.
Analysts say the global platinum deficit could widen to 500,000 to 600,000 ounces by the end of 2008, compared with about 265,000 ounces in 2007. The market had a surplus of 65,000 ounces in 2006, following seven successive years of deficits.
Ongoing supply disruptions in South Africa continue to limit platinum’s downside risk, as traders view dips as buying opportunities, TheBullionDesk.com said in a daily report.
And with investors still increasing their holdings through the ETFs, the market deficit is expected to widen considerably with the spot price potentially set to challenge $3000/oz later in the year.
London-based ETF Securities said on February 21 its platinum exchange traded commodity fund had more than doubled its holdings of the precious metal to 302,000 ounce since the start of January. Platinum supplies are heavily dependent upon this market and the delicate power supply situation as well as mine safety concerns leave mine output extremely susceptible to potential disruption, it said in a report.
In other precious metals, gold rose as high as $949.40 an ounce and was last at $945.80/946.70, against $944.40/945.20 in New York late on February 21, when it hit a record of $953.60.
Dealers said the prospect of more US rate cuts supported gold’s appeal as an alternative investment and kept the upward momentum intact. Bullion has risen 14.4 per cent this year.
US markets are now fully pricing in a 50 basis point cut at the Federal Reserve’s next meeting in March to 2.50 per cent and factor in a small chance of an even bigger 75 basis points. A rate cut tends to weaken the dollar and helps gold. High prices has been hitting physical demand. A senior official at World Gold Council said gold imports by India, the world’s largest bullion consumer, fell 72 per cent in January to around 24 tonnes from a year ago.
Gold and platinum slipped after reaching record levels. Gold fell to $934.50 a troy ounce after hitting $953.60. Speculative long positions betting on price gains for gold reached a record high of 212,259 lots in the week ending February 19, the Commodity Futures Trading Commission said.
The US Treasury has softened its position regarding gold sales by the International Monetary Fund. David McCormick, US Treasury undersecretary for international affairs, said he was confident that proposals to allow the sale of some of the IMF’s gold stocks, estimated at 103.4 million ounces, would find some support in the US Congress.
Previous IMF attempts to sell gold in 1999 and 2005 were opposed by Congress. However, the market will not be swamped with IMF gold as any disposal would come under the Central Bank Gold Agreement, which limits total annual sales by its signatories to 500 tonnes.
Platinum also lost and fell to $2135 a troy ounce on February 25. CFTC data showed a reduction in speculative, net long positions for a sixth consecutive week in spite of prices rising to record highs on concerns that the South African power crisis would cause a shortfall this year.
Oil:
Oil prices rose to an all time peak of nearly $103 in the
New York market on February 28, eclipsing the inflation adjusted high of $102.53 reached in 1980, a year after the Iranian revolution.
Runaway price levels have meanwhile sparked widespread speculation that the Opec crude exporters’ cartel will maintain current output levels at a keenly-awaited production meeting next week. Concern that Opec could reduce output has been one of the factors driving prices above 100 dollars this week, analysts said. Many oil industry experts now expect the Opec will hold its official daily output at 29.67 million oil barrels.
Oil has drawn support from cold weather in Europe and the US as well as the Opec president’s view that the group will not raise output at its meeting next week. Below normal temperatures are forecast for parts of the northern United States, while cooler temperatures are expected in northwest Europe, boosting demand for heating.
The oil market is also trying to gauge what the Organisation of the Petroleum Exporting Countries might do when it reviews oil output at its meeting in Vienna on March 5. Opec President Chakib Khelil pointed to a slowdown in top energy consumer the United States as a reason why he believed the producer group would not increase output.
Some oil market analyst believe a seasonal drop in demand will lead Opec to curb oil shipments unofficially.
In the United States, crude oil supplies are forecast to have risen last week by 2.5 million barrels, the seventh increase in a row, as refineries undergoing maintenance have built up stocks.
The dollar slumped to an all-time low against the euro as well as a basket of major currencies after data from the United States highlighted a gloomy outlook for the US economy, raising the spectre of more rate cuts.
A weak dollar can trigger commodities buying as investors seek to preserve their nominal value in other currencies.
The price of oil has risen nearly 66 per cent in the past year in US dollar terms, whereas in terms of euros, the rise has only been around 47 per cent.
Analysts and investors also said that the US was seeing a sharp increase in inflation, after data showed that producer prices rose one per cent in January and by 7.4 per cent on an annual basis, the biggest 12-month gain in more than 26 years.
Barclays Capital raised its average oil prices forecast for 2008 to $97.7 a barrel from $87.4 previously. Oil has averaged around $93.66 so far this year, up from $72.30 in 2007.
Gold/platinum
