Platinum rises to five-month high on planned ETF

Platinum prices rose for a second day to their highest in almost five months in Asia on speculation that demand will exceed supply after the introduction of an exchange-traded fund. Platinum futures in Tokyo reached a record high.

Zuercher Kantonalbank, the biggest of Switzerland's 24 government-controlled cantonal lenders, will introduce exchange-traded funds (ETFs) for three precious metals, including platinum, the bank said in a statement on April 13. This may be the first for platinum, according to Mark Bedford of Johnson Matthey.

Prices of platinum, used in auto catalysts and jewellery, have risen for the past four years and reached a record $1,402.50 on November 21 on speculation about a new exchange-traded fund.

So-called ETFs purchase and store metal, allowing investors to trade assets without owning them.

"News of the ETF is the driving force behind platinum today, the market is quite firm on the back of the news,'' said Jonathan Barratt, managing director of Commodity Broking Services in Sydney, said by phone today.

Platinum for immediate delivery rose as much as $15.5, or 1.2 per cent, to trade at $1,286.5 an ounce, the highest since November 21, and traded at $1,280 at 5:05 pm Singapore time.

"The markets have got to work out where they are getting it from and have they got enough and all those sorts of things,'' Barratt said.

The Swiss bank plans to list the new ETFs, based on silver, platinum and palladium, on the SWX Swiss Exchange and trading is scheduled to start on May 10, the bank said. The new investment products are designed for wealthy private clients and institutional investors, it said.

"It's the first that I'm aware of,'' said Bedford, director of precious metals marketing at Johnson Matthey in Royston, UK. The ETF news came at a time when the market saw strong demand for the metal used in catalytic converters to reduce emissions from diesel vehicles under tough environmental regulations and from oil refineries, said Shuji Sugata, research team manager at Mitsubishi Corporation Futures in Tokyo.

In Japan, platinum for delivery in February 2008 rose as much as 98 yen, or 2.1 per cent, to 4,864 yen a gram ($1,267 an ounce) and closed at 4,828 yen on the Tokyo Commodity Exchange. The maximum daily price fluctuation limit for platinum is 100 yen.

"It's because of the rise in platinum prices in markets overseas, as well as the weakening of the yen against the dollar,'' said Kazuhiko Saito, chief analyst at Interes Capital Management in Tokyo. "There has been fund buying.''

The yen, which is near the lowest in six weeks against the dollar, traded at 119.44 a dollar at 4:30 pm in Tokyo, compared with 119.25 in late New York on April 13. Palladium for delivery in February 2008 also gained as much as 38 yen, or 2.7 per cent, to 1,472 yen a gram, the highest since May 2002, before closing at 1,468 yen in Tokyo.

Palladium for immediate delivery rose as much as $3.50, or 0.9 per cent, to $380.5 an ounce, the highest since May 17, and traded at $377.5 at 4:53 pm Singapore time.