Tokyo platinum futures extended gains to a fresh 2 1/2 month high on Tuesday, as the market's technical strength prompted speculative buying by overseas operators and stop-loss orders from local investors. The December platinum futures contract on the Tokyo Commodity Exchange rose as high as 2,887 yen per gram, the highest for TOCOM's benchmark contract since November 16, when prices touched 2,915 yen.
"It was a short-covering rally," a Tokyo broker said, adding that investors who had gone short on TOCOM platinum below 2,750 yen were being squeezed. "Considering today's turnover, I believe a large volume of short positions still remain in the market, and more buybacks are likely to come tomorrow," he said.
Turnover of TOCOM platinum were 73,698 lots on Tuesday, while open interest stood at 160,511 lots at the end of Monday trade.
The benchmark contract finished up 36 yen at 2,866 yen on Tuesday, regaining 192 yen or 7.2 percent from the December low of 2,674 yen. TOCOM platinum turned bearish last November after British refiner Johnson Matthey forecast in a report that platinum supplies would exceed demand in 2005 for the first time in several years thanks to expanded mine production.
TOCOM's benchmark platinum tumbled 2.6 percent to a low of 2,798 yen on November 17, the day after the report was released. After confirming a floor around 2,700 yen in January, the market has been regaining ground gradually, and the technical improvement induced fresh buying by overseas fund operators.
After breaking resistance at 2,844 yen on Tuesday, the benchmark contract looks poised to recover to the key 2,900 yen level in the short term, the Tokyo broker said.
Reflecting higher TOCOM prices, spot platinum also jumped as high as $882 an ounce on a bid basis on Tuesday, matching a level seen in December, which was the highest since last August.
Spot platinum was quoted at $878/883 an ounce, up from $869/873 in late New York on Monday.
In the gold market, trade was thin with prices confined to narrow ranges as many operators kept to the sidelines before a series of major financial events this week that could set the direction for the dollar and bullion prices.
TOCOM's benchmark December gold contract closed down one yen per gram at 1,413 after moving between 1,409 and 1,414. Spot gold was quoted at $422.15/65 an ounce, against on Monday's New York close of $422.25/423.00.
The dollar was at 103.66/71 yen, little changed from late on Monday US trade. The dollar shuttled in a tight range on Tuesday ahead of a Federal Reserve interest rate decision on Wednesday and a gathering of Group of Seven finance ministers and central bankers in London on Friday and Saturday.
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