Platinum climbed to a 17-month high on optimism that vehicle demand in China will continue to grow as the country leads the recovery from the global recession. Palladium rose to the highest since July 2008.
Platinum futures headed for the longest rally in more than two years after China's vehicle sales jumped 46 percent in 2009, overtaking the US as the world's largest automobile market and ending more than a century of American dominance. Automakers account for almost two-thirds of global platinum consumption.
"Platinum group metals are a necessary component in construction of catalytic converters," said James Steel, an analyst with HSBC Securities. "The prospect of a continued recovery in global automobile demand this year is positive for platinum group metal prices."
Platinum for immediate delivery rose as much as 1.5 percent to $1,615.75 an ounce, the highest price since Aug 6, 2008. Futures on the Comex division of the New York Mercantile Exchange rose for an eighth day, the longest winning run since the 11 days to Oct 1, 2007.
One ounce of platinum costs about $459 more than an ounce of gold, a spread not seen since September 2008, when Lehman Brothers Holdings Inc's bankruptcy filing dragged the global economy down. Platinum prices dipped briefly to less than gold for the first time in 12 years in December 2008.
China's sales of passenger cars, buses and trucks rose to 13.6 million last year, the fastest pace in at least 10 years, the China Association of Automobile Manufacturers said yesterday.
The introduction of exchange traded funds linked to platinum and palladium is expected to encourage "significant investor interest", said Standard Chartered Plc's metals analyst Dan Smith. The US Securities and Exchange Commission approved proposed rule changes on Dec 22 to list and trade shares of the ETFS Platinum and Palladium Trusts.
Platinum holdings held in ETF Securities Ltd's exchange-traded commodities products increased 158 ounces to a record 440,388 ounces on Jan 8.
Palladium for immediate delivery gained as much as 1.1 percent to $439.13 an ounce, while futures in New York added as much as 1.9 percent to $440 an ounce. Both levels are the highest since July 16, 2008.
