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Ballistic platinum metals grab spotlight as gold stumbles

NEW YORK: Soaring platinum and palladium stole centre stage in the New York precious metals markets late Tuesday, elbowing aside gold which succumbed to more profit taking after hitting four-month highs Monday, dealers said.

The auto industry has driven the surge in platinum gro have not cost $500 since May 1990.

March palladium closed at $579.80, 20 cents off its high, toting up a staggering $38.90 gain, or seven percent on the day. Platinum has now risen more than $90 year-to-date and palladium is up $113.

"This market is at the mercy, at the fiat, of somebody else across the world," said Ralph D'Esposito, a NYMEX floor broker at RJ Futures.

"Dealers need it. The car people need the metal. This is a real live supply and demand commodity right now," he said. "If the Russians said something like 'Sorry. Forgive us, here's all the metal you want,' it would wipe out the whole board."

Palladium is a more efficient autocatalyst than once-dominant platinum and has been leading the move higher.

At the same time Russia, which produces 20 percent of all platinum and 65 percent of palladium, has failed to deliver enough metal to meet surging demand in the West, where emissions laws are growing increasingly stringent.

Moscow red tape has delayed palladium shipments to world markets in the first half of every year since 1997, when palladium started the year trading around $120 an ounce. Platinum cost about $363 in January 1997.

In London, spot platinum was fixed in the afternoon at $515 an ounce and was quoted late in New York at $528.00/$533.00. Palladium was fixed at a new all-time high of $540 and was quoted at $575.00/$580.00.

Meanwhile, COMEX April gold shed $2.80, settling at $301.70 an ounce in a range of $308 to $298.50. Spot bullion was quoted late at $298.00/$300.00, compared to London's late fix of $296.25 and Monday's New York close at $300.80/2.80.

Gold futures have retraced much of an abrupt two-day spike, disappointed that Canada's Barrick Gold Corp did not join other big miners in swearing off gold hedge sales.

"The funds were covering their shorts yesterday and went long and are covering their longs today," said Drummond Gill, head of North American bullion trade at ScotiaMocatta. "I think that's making swings in the markets more serious than they normally would be because of the announcements."

The reversal from Monday's April gold top at $326.90, its highest since Oct 7, started after Barrick said it was committed to hedging, though it halved the size of its hedge book in the last three months of 1999 to 9.8 million troy ounces.

The market had priced it to spurn forward gold selling after fellow Canadian Miner Placer Dome Inc helped catapult gold prices past $300 Friday by saying it suspended its hedging programme and expected gold prices to improve.

"It is a great leap of faith to say that most other potential hedgers will follow Placer's lead," wrote Merrill Lynch in its metals commentary late Monday. "For producers to suddenly stop forward hedge sales in gold after having engaged in successful programmes in recent years is a great risk."

Longs were also wary because the specter of official sector sales is still haunting the gold market. The Dutch central bank said Tuesday that it had sold another five metric tonnes of gold last week, as part of its programme to dispose of 100 tonnes by next September.

Since announcing their plan in early December, the Dutch have sold a total of 70 tonnes of gold, conforming to the September 26 agreement by 15 European central banks to limit gold sales to 400 tonnes a year for five years.

News of that pact sparked gold's last big rally to two-year spot and futures highs near $340 an ounce on Oct 5.

March silver was rose 5.5 cents to $5.34 an ounce, touching $5.28 and $5.37. Spot silver last fetched $5.26/29, versus the fix at $5.27 and the previous close at $5.22/25.-Reuters