In a rare development, gold prices have surpassed usually costlier platinum from the precious metal basket.
Abroad, gold is trading at $1,746 per ounce and platinum at $1,732. In the Mumbai market, gold prices on Tuesday went up further by Rs 875 to Rs 25,805 per 10g. During the day, the price touched Rs 26,000. Platinum was quoted at Rs 25,500 per 10g. Silver, another member of the precious metal basket, was Rs 59,085 per kg, down by Rs 1,450.
Platinum is costlier than gold traditionally but is mostly used for industrial purposes. The sharp rise in gold is due to its growing demand as a safe haven and after the US credit downgrade by Standard & Poor’s, gold is seen as virtual currency. Switzerland has even removed value added tax on gold bars. In the morning, gold was trading at as high as $1,782.3 per oz on safe haven demand and perhaps the only asset rising fast.
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“Platinum prices are lower than gold because the markets seems to have punished it for its major use for industrial purpose. Gold has been the most sought asset in the recent times of economic turbulence and US downgrading,” said Philip Klapwijk, global head of metals analytics, Thomson Reuters.
The platinum market size is a little less than a tenth of gold’s. Chemical labs also use platinum for testing purposes. In 2007-08, it was trading at more than double gold prices internationally. In India, annual platinum demand is around 10 tonnes, expected to go up, as jewellery made from it is in demand. In India, apart from imports, platinum supply also comes from recycled material.
In the Mumbai market, platinum prices are not regularly quoted but the price calculations are based on London Metal Exchange prices.
Umesh Shah, vice president of the domestic jewellery division at Shrenuj & Co, said: “With platinum trading around gold prices, the demand of platinum for jewellery is expected to go up.”
He said a decade earlier, platinum used to be quoted at a 250 per cent premium to gold.
Klapwijk said gold could touch $1,800 by year-end and that may happen faster if the US Fed announced a third round of quantitative easing. However, silver and platinum will remain under pressure, as their industrial use is much more.
