Platinum prices stuck close to their highest in 25-1/2 years in Europe on Thursday amid investment fund interest, while gold tested $470 before retreating, traders said. "Platinum is looking good...and there appears to be reasonable buying below the market," one trader said.
Some traders attributed the move to more stringent world auto emission laws and increased production of diesel-powered vehicles, which can only use platinum in their catalyst systems.
Others said the precious metal, which is also widely used in jewellery, had seen good demand from Chinese jewellers when prices fell below $920 last week. This had in turn stimulated fund buying.
Spot platinum, now up some five percent in just one week, peaked at $958 a troy ounce, its firmest since March 1980.
"There were some good volumes before the big move," said Jeremy East, global head of precious metals at Commerzbank.
"I think there's a combination of industrial and jewellery demand from the Far East, which attracted speculative demand once the market had started to move."
Some were now looking for platinum to target $1,000.
At 1555 GMT spot platinum was quoted at its peak of $958.00/962.00, against $950.00/953.00 late in New York on Wednesday.
Palladium was stronger at $241.00/244.00 an ounce, up from $233.00/237.00 and the highest since June 2004.
Palladium rose above $1,000 in early 2001, but more reliable exports from Russia and increased production from South Africa helped prices ease back.
Gold briefly touched $470 an ounce after the dollar was sold off following a report that showed the US trade deficit ballooned to a record in September.
But the US currency then rallied against the euro, causing gold to retreat.
Some traders felt the gold market had potential for another break to the upside, reporting good demand from India earlier in the week when prices fell back to $455.
"If we can break through there ($470), I think we'll be looking towards the highs again," East said.
Gold was at $467.50/468.30 an ounce, against the $466.20/467.00 last quoted in New York.
Barclays Capital said it was still "too early to embrace a more aggressive posture" and was waiting for a break of $472.
"Notwithstanding near term volatile trading conditions, gold's strong rebound from last week's sell-off is telling of the healthy underlying fund support in the market," the bank said in its daily report.
Silver was at $7.71/7.73 from $7.65/7.67.