Platinum, Gold jump to highest in 18 months

Platinum jumped to a 17-month high on Tuesday, lifting palladium to its highest since July 2008 as the launch of new investment vehicles triggered investment and speculative buying.

Gold prices were slightly higher in early European trade, hovering within striking distance of a five-week high of $1,1161.50 an ounce hit on Monday and taking its cue from currency markets.

The launch of platinum- and palladium-backed exchange-traded funds on the New York market has given US investors their first opportunity to invest in the metals via an ETF.

Spot platinum hit $1,622.50 an ounce, its highest since August 2008 and was at $1,620 an ounce by 0816 GMT, versus $1,591.50 an ounce late in New York on Monday.

Spot palladium also rose to $439 an ounce, its highest since July 2008 and was last at $438.50 an ounce versus Monday's $431 an ounce.

"The news on the ETFs have put the PGM metals in focus," said Wolfgang Wrzesniok-Rossbach, head of sales at Heraeus. "This has shown that they could be another alternative investment."

The new US funds, operated by a US subsidiary of London's ETF Securities, started trading on January 8 on the NYSE Arca platform of the New York stock exchange. Anticipation of recovery from the car industry has also bolstered the prospects for platinum, which is used in auto catalysts used to clear car exhaust fumes.

Gold prices were slightly higher at $1,156.10 an ounce versus $1,151.10 an ounce late in New York on Monday, when it touched a five-week high of $1.161.50 on Monday after worse-than-expected US jobs data sent the dollar lower.

Data on Friday showed US employers cut 85,000 jobs in December, disappointing investors who were expecting a quicker turnaround for the world's largest economy.

On Tuesday the dollar jumped against the yen and the euro after an official from China's sovereign wealth fund said the US currency had hit bottom.

But the greenback quickly reversed those gains after the official said the comments were only his personal view, prompting some investors to drop the currency. "The market's focus was on a US rate hike taking place sooner rather than later but that view receded, causing the dollar to fall, which was positive for gold," said Shuji Sugata, a manager at Mitsubishi Corp Futures Ltd.

He said gold prices would likely continue to take their cue from the currency market.

"I think the view of an imminent rate hike has receded, and this suggests that gold's bottom price may be quite solid," Sugata added.

Higher US interest rates boost the dollar and put pressure on gold, which is often used as a dollar alternative.

US gold futures for February delivery were at $1,157.5, up 0.54 per cent from Monday's close of $1,151.40 on the COMEX division of the NYMEX.

The world's largest gold-backed exchange-traded fund, SPDR Gold Trust, said its holdings stood at 1,119.541 tonnes as of January 11, unchanged from the previous business day.