The Hindu Business Line : Platinum, palladium may scale new highs in 2007

Precious metals are set to go places this year. After gold and silver, it is platinum and palladium. Strong fundamentals and positive investor sentiment towards platinum would combine to result in a further rally, while the outlook for palladium too looks bullish despite stock sales, GFMS said in its Platinum and Palladium Survey 2007 released on Wednesday.

Despite modest surplus due to further growth in mine production and another year of contraction for jewellery, the consultancy expects investor sentiment to stay supportive due to longer-term background factors such as dollar weakness, inflation concerns and geopolitical tensions.

Indeed, the news on ETF front has the potential to provide further boost.

Currently, the metal is trading slightly above $1,300 an ounce. GFMS has forecast that the price would reach $1,450/oz this year.

Overall Buoyancy

As for palladium, notwithstanding market fundamentals, an upside potential to prices is seen. The metal could get into a sizeable residual surplus caused by heavy stock sales by Russia, in addition to slightly higher mine production and autocatalyst scarp.

Notwithstanding this, prices could rally to $420/oz (current levels $375/oz) due to continued investor support linked to overall buoyancy in precious metals, further substitution opportunities in autocatalysts and longer-term promise of palladium jewellery, the Survey pointed out.