Platinum And Palladium Still Kings In Asia

Asian gold trade remains overshadowed by the sharp rallies in platinum and palladium prices, but gold has the potential to ride higher in the wake of its sister white metals, Far East dealers said on Friday.

They said gold could test the $346 and $347 an ounce levels in coming days, but this forecast was tempered by persistent stiff resistance at the $345 level.

Hong Kong spot gold opened at $343.80/344.30 an ounce and firmed to $344.30/80 per once by 0430 GMT on the back of robust platinum and palladium prices.

"We're not getting carried away or anything," said one Hong Kong dealer, noting that producers had sell orders between $345 and $348 and this selling would cap any further gains in gold.

 

"With attention fixed on the white metals, gold will likely be stuck between $340 and $345," one Singapore dealer said.

"We've seen further gold buying on white metal strength," said a senior Hong Kong banker on Friday.

Tokyo dealers have stopped quoting forward prices for palladium and platinum, another Hong Kong dealer said.

Other dealers said the PGMs (platinum group metals) were going up in "thin air trading."

"It's hard to get a market, nobody has anything to sell and nobody wants to go short," said one source.

Others said that platinum and palladium traders would quote for customers but would not quote for inter-bank transactions.

Soaring platinum and palladium lease rates had spilled over into implied gold lease rates, dealers said.

"For one year lease rates, it's moved up 30 basis points and in the short term, it's up 75 to 100 basis points," one source said, adding the rises were driven by speculative business.

New York Comex and NYMEX precious metals futures ended higher on Thursday, led by gains in platinum prices, amid ongoing talk of delivery problems in the physical market due to Russia's five-month export suspension.

Spot platinum was quoted at $480/$510, the highest level since 1990, in early trade in London on Friday, after earlier touching $446 overnight in New York.

Views on physical demand remain divided, with Hong Kong dealers notably nonchalant and their Singapore counterparts cautiously optimistic.

"There's obviously some buying, but people are not going mad or anything like that," said a senior Hong Kong trader.

Singapore market sources said that physical gold demand had picked up after a dip in world prices over the past few days and was expected to remain at a steady level into next week.

Strong Indian consumption continued to provide cheer to a gold market which seemed unable to break out of its narrow $340-$345 an ounce range, the dealers said.

Dealers said Indonesian buying had picked up some steam just before and after the general election in the country. (Reuter)