Tokyo platinum futures rebounded on Wednesday as the yen's dip against the dollar this week drew buyers to the yen-based precious metal, while palladium surged to its highest level since November 2002.
Yen-based platinum futures also gained support from dollar-denominated spot platinum managing to sustain psychologically important support of $880 per ounce.
"Traders who were caught short after the recent downtrend were actively covering their positions, having seen spot platinum holding above $880," said Kaname Gokon, research section manager at Okato Shoji.
"The yen's recent weakness also helped encourage steady short-covering on dips," Gokon said. "Technically, platinum looks strong again."
The benchmark February platinum futures on the Tokyo Commodity Exchange closed up 22 yen at 2,905 yen per gram. They had moved in a range of 2,870 to 2,910.
Other platinum contracts closed up two to 17 yen. Spot platinum was quoted at $887/$892 per ounce against $880/$885 in late New York on Tuesday. Traders said that with many US traders limiting their activities ahead of the Easter holidays starting this weekend, Japanese trade houses were key bidders in the platinum market.
Sister metal palladium continued to draw strong interest in reaction to news that carmakers may soon be able to use palladium in diesel catalytic converters.
On Friday, Belgian metals group Umicore SA said it had found a way to replace some platinum with palladium in diesel emission control systems and that the technology may go on the market in 2005.
The key February palladium contract rose as high as 1,125 yen it's highest since November 18, 2002. It closed up 23 yen at 1,098 yen.
"There are still plenty of players willing to build long positions in palladium with (Umicore's) news encouraging bids," Okato's Gokon said.
The benchmark February gold contract was unchanged at 1,425 yen per gram. Spot bullion was quoted at $419.20/419.95 an ounce against $419.50/$420.05 in New York. Below are closing prices for TOCOM's most active precious metals contracts, with the day's turnover for each metal.