Platinum/Gold IN the Singapore market, platinum rose to its strongest level in four months on February 5 and palladium held near its highest since September 2011 on growing hopes the global economy was on the mend, while gains in equities hurt gold’s safe haven appeal. Platinum and palladium have outperformed gold so far this year on an improving economic outlook and after mining disruptions in South Africa as well as a drop in supply from Russia triggered fears of a deficit. Both metals are used in jewellery and auto catalysts.

Palladium prices are expected to rise to a record average high this year and platinum prices are seen posting their best price performance in two years as South Africa’s supply problems worsen and the economic cycle starts to favour industrial metals. Platinum hit a high of $1715.25 an ounce. It powered to a record $2290 in early 2008 after a power crisis in main producer South Africa disrupted mining and sparked fears of a supply deficit. Meanwhile palladium gave up early gains and stood at $760.88 an ounce.

Upheaval has plagued producers in South Africa since August last year, when thousands of workers staged a series of illegal strikes, winning pay increase. Nine loss-making mine shafts were shut in the second half of 2012, according to government data, while Anglo American Platinum Ltd., the largest producer, last month announced plans to idle four shafts. Prices have gained 13 per cent this year on expectations global supply will drop to a 13-year low.

Holdings in exchange traded-products backed by platinum stood at 51.45 metric tonnes on February 6 from a record 51.46 tonnes on February 5.

In the New York market, platinum futures advanced to their highest level in more than a year, while palladium set fresh multi-month highs, amid ongoing concerns about South African supply of the precious metal. Platinum for April delivery, the most active contract, was recently up $22.60 or 1.3 per cent at $1729.80 a troy ounce on the New York Mercantile Exchange. Platinum and palladium prices continued to draw strength from international focus on South Africa’s platinum mining industry.

The country dominates global output of both precious metals, which are often found together. Analysts and industry members say that factors like a strong rand, the rising cost of electrical power and demand for higher wages has made much of South Africa’s platinum mining unprofitable. This has sparked talk of widespread mine closures and raised concerns about a supply shortfall.

Gold slipped $2.04 an ounce to $1670.56, a drop partially triggered by news that India’s central bank would consider imposing value and quantity restrictions on gold imports by banks under extreme conditions. The world’s biggest consumer of gold is battling a record high current account deficit. India’s central bank is considering more steps to restrict gold imports and help stem the country’s widening current account deficit. Gold purchases are one of the biggest contributors to the deficit in the current account. It hit a record $22.3 billion or 5.4 per cent of GDP, in the July- September quarter, as imports outpaced exports. India imports about 900 tonnes of gold each year, mainly through designated banks. The government last month increased the import duty on gold to six per cent from four per cent earlier.

Hong Kong’s net gold flow to mainland China jumped 47 per cent in 2012 to a record high of $557.478 tonnes, indicating robust demand in China, which vies with India to be the world’s top gold consumer.

Gold was a touch firmer on modest investment demand in Asia on February 7, but the near-term outlook suggests some weakness as physical demand for the metal wanes due to subdued trading activity in China ahead of the Lunar New Year holiday next week. Spot gold was at $1,678.90 a troy ounce up $1.60 from its previous close.

The yellow metal’s inability to push higher despite a weaker euro indicates “underlying weakness” in gold. As the global economy shows signs of nascent recovery, gold’s allure as a safe-haven is likely to diminish. Based on technical indicators, Scotiabank noted that gold has been trapped between $1,652 and $1,695 for a month.

On February 7, gold edged up in the New York market spot gold was up 0.3 per cent at $1677.16 an ounce. Meanwhile in the Singapore market, gold hit an intraday high at $1680.95 as buying interest resurfaced before the Lunar New Year break in Asia. In the London market, US gold futures for April delivery rose 0.2 per cent, while a weaker Japanese yen against the dollar sent gold futures on Tokyo Commodity Exchange to another record at 5081 yen a gram overnight.

Meanwhile, China likely produced a record 403 tonnes of gold in 2012, 11.7 per cent higher compared to a year earlier, the China Gold association said. The world’s largest gold producer is aiming for an annual production of 450 tonnes by 2015.

Other precious metals were lower with spot silver at $31.84 per ounce, down one cent, platinum at $1,733.75 per ounce, down 25 cents and palladium at $761.52 per ounce, down 48 cents.

In the past few sessions, platinum has been underpinned by concerns about demand outpacing supplies from South Africa, which accounts for 80 per cent of the global platinum output. Similarly, palladium was also supported on suggestions that Russia, the biggest supplier, may not be able to meet supply contracts analysts said.

In the London market gold edged higher on February 6, recovering early losses, as stocks came under pressure from renewed concerns over the euro zone economy, and on caution ahead of a European Central Bank meeting.

Platinum and palladium held near 17-month highs, benefiting from rising appetite for industrial metals as confidence in the growth outlook improved, and on concerns over the supply outlook from major producers South Africa and Russia.

Gold prices are flat from the start of the year, struggling from traction as a run of better economic data boosted the appeal of assets more highly geared to the economic cycle, such as stocks and industrial commodities.

Oil

OPEC, which accounts for 40 per cent of global oil supplies, would probably keep its production stable for the time being after member countries cut output in November and December, said the oil cartel’s secretary general. Opec anticipates prices of around $110 a barrel on average for 2013. Brent crude oil, the global benchmark, set a record annual average in 2012 of roughly $111.5 a barrel.

Weak global growth and increased domestic oil production on the US, have led some analysts to forecast downward pressure on the price of oil this year. Saudi Arabia, Opec’s largest producer, cut production to its lowest in a year in December.

Oil rose for the second time on February 6 after a report showed US fuel demand climbed while crude supplies shrank at Cushing, Oklahoma, the biggest US storage hub and the delivery point for the New York-traded contract. US refiners supplied 1.2 per cent more fuel over the past four weeks than a year earlier, according to the Energy Information Administration report. Cushing stockpiles declined 315,000 barrels last week to 51.4 million, the lowest since the week ended January 4 Brent’s premium to West Texas Intermediate widened to the most in more than a month on February 6.

Brent for March settlement climbed 15 cents to $116.88 a barrel on the London-based ICE Futures Europe exchange. The number of contracts changing hands was 27 per cent higher than the 100-day average. The European benchmark grade was at a premium of $20.14 to WTI. It closed at $20.11 on February 6, the widest since December 24.

The amount of oil products supplied by US refiners over the past four weeks, a proxy for demand, averaged 18.3 million barrels a day last week, the EIA report showed. They were forecast to gain 2.65 million barrels.

Copper

IN the London market copper edged lower on February 7, undermined by a weaker euro following comments by the head of the European Central Bank (ECB), while volumes were moderate ahead of the Lunar New Year holiday in top metals consumer China. An improved outlook for the global economy this year, reflected in positive data from China and the United States, helped lift copper prices earlier last week, although the optimism has yet to translate into strong physical demand. Three-month copper on the London Metal Exchange (LME) closed down 0.55 per cent at $8,200 a tonne. LME copper stocks have climbed over 80 per cent since mid-October.

LME copper has gained about four per cent this year, lifted by upbeat economic data from the United States and top metals consumer China, but underlying demand has been lacklustre.