Platinum held steady on Tuesday, consolidating the previous session's run to a four-high, with dealers expecting further gains in coming months as macro-economic data brightens. An improving global economic outlook and persistent supply disruptions in South Africa, the world's largest supplier, have helped platinum and sister white metal palladium to outperform gold and silver so far this year, triggering additional investor interest.
Spot platinum was flat at $1,693.74 an ounce by 1622 GMT, off a four-month high of $1,705.25 hit on Monday. Spot palladium fell 0.8 percent to $749.50. It touched 17-month high of $759.75 on Monday after a month of gains. "In the longer term, sentiment towards platinum and palladium is generally bullish as supply issues at Amplats and good economic data suggest the fundamentals are strong," VTB Capital analyst Andrey Kryuchenkov said.
"There may be a bit of profit-taking in coming weeks after the strong January gains... February is cyclically slower and interest may reduce." Analysts also said demand for platinum group metals (PGMs) to make exhaust autocatalysts is still patchy, with continued weakness in the European market contrasting with improvements in the United States and China. Switzerland's net exports of platinum more than tripled and of palladium jumped more than 50 percent in 2012, data from the Swiss customs bureau showed on Tuesday. Switzerland is a major refining and trading hub for the platinum group metals.
Gold weakened after further signs of US economic recovery weighed on the metal's investment appeal. The US services sector expanded in January although the pace slowed slightly from the previous month, with robust jobs growth offsetting slowness in new orders. Spot gold was down 0.2 percent to $1,670.21 an ounce, while US gold futures for April delivery fell 0.5 percent to $1,668.90. Spot silver was down 0.1 percent to $31.75.
"Investors are so cautious at the moment and prices are constantly challenged by better-than-expected macro numbers, while inflation pressures are not there," Kryuchenkov said. "Moreover, if you look at bond yields, US treasuries yields, these are around pre-crisis levels, suggesting that risk aversion is not there either," he added.
Signs that the euro zone economy is stabilising - the Markit's Eurozone Composite PMI showed a rise to a 10-month high in January - and the US recovery is gaining traction drove investors to the higher-yielding equity market and out of non-yielding gold on Tuesday. Gold has been trapped in a range between about $1,660 and $1,680 an ounce since late last week and momentum appears to be running out after a 12-year rally in prices.
Physical buying interest is likely to slow down in China ahead of the week-long Lunar New Year holiday that starts on Saturday. "Physical buying still remains fairly robust as China approach their NY holiday, and has certainly helped to cushion pullbacks over the last month or so," MKS Capital said in a note. "It will be interesting to see how the market will react next week when this disappears."
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