Following the launch of the palladium and platinum funds earlier this month, these metals have benefited from expectations that buying interest will remain intact for some time. In addition, signs of steadying global economies and views that central banks might start draining ample funds from the banking system or raise interest rates later in the year are also prompting investors to buy the platinum group metals (PGM).
"The PGM price development is related to the global economy and views that the economy is already recovering," said Dick Poon, manager of precious metals at Heraeus in Hong Kong. "The ETFs backed by PGMs are also supporting prices." Investors sold inventories last year when demand was slack, but they started buying these metals from the second half of 2009, partly because they may need to fill up their stocks, Poon said.
"With the possibility of an interest rate rise later in the year, investors may be thinking it's better to buy PGMs now than later," he said. Spot platinum rose above $1,626 per ounce to a fresh 17-month high on Tuesday, rising as high as $1,639.00, or up 1.6 percent, from late London trade on Monday. Spot palladium rose as high as $460.25, the highest since early July 2008, or up 0.6 percent from late London trade on Monday.
Gold's rise on Tuesday was muted compared with the PGM price rally, as the dollar remained directionless while the euro dictated currency moves on Tuesday. "There is only so much contagion gold can get from other metals," said Darren Heathcote, head of trading at Investec Australia in Sydney. "Gold is still taking the lead from the US dollar. We haven't seen much of a movement in gold because there is a lack of clear direction in the US dollar," he said.