While often overshadowed by gold, platinum has made a strong run with the help of a new US exchange traded fund and strong demand for cars in China. China’s auto market has surpassed the US in terms of sales which directly affects the platinum market, since Automakers account for almost two-thirds of global platinum consumption. See the following article from Commodity Online for more on this.
Proving most of the expert analysts right, platinum has showed the world that it is the metal to watch in 2010. In an unprecedented surge, platinum prices climbed to a 17-month high on Wednesday drawing strength from the recently announced exchange-traded funds in the US.
US had announced of the platinum exchange traded funds this month which drew huge investment immediately after the launch.
Spot platinum rose as high as $1,654 per ounce, a level last seen in August 2008.
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With China last week announcing that it has become the largest auto market in the world, platinum and base metal prices have seen a surging tendency.
A Chinese report said 13.6 million vehicles were sold last year in China, which would make it the world’s biggest car market, ahead of the US.
Platinum, which like palladium, is used predominantly in producing catalytic converters in vehicles.
Platinum futures headed for the longest rally in more than two years after China’s vehicle sales jumped 46 per cent in 2009, overtaking the US. Automakers account for almost two-thirds of global platinum consumption.
Platinum group metals are a necessary component in construction of catalytic converters for cars. One ounce of platinum costs about $459 more than an ounce of gold, a spread not seen since September 2008, when Lehman Brothers Holdings’ bankruptcy filing dragged the global economy down. Platinum prices dipped briefly to less than gold for the first time in 12 years in December 2008.
Its sister metal palladium paused but continued to trade near 18-month highs marked this week. It was at $459.25 per ounce, down from $464 in New York.
This article has been republished from Commodity Online. You can also view this article at Commodity Online, a commodity news and analysis site.