Source: Reuters
London— Silver prices set fresh 18-1/2-year highs in Europe on Wednesday as talk of setting up a new exchange-traded fund spurred investment fund buying, while platinum touched its highest-ever level. Gold came within a whisker of last week's 25-year high before easing in the afternoon session, but the market tone stayed bullish on worries about inflation and economic growth.
Silver
"I think there has been buying ahead of any solid news on whether or not the exchange-traded fund will be approved," said Yingxi Yu, precious metals analyst at Barclays Capital.
The U.S. Securities and Exchange Commission has published a notice to solicit comments on the iShars Silver Trust, Barclays said in a daily report.
Gold ETFs are already functioning and have generated good interest. These products, traded on some of the world's major stock exchanges, give investors a share of a bar of gold. Analysts say the five gold ETFs now hold 400 tonnes of gold.
"Silver has lagged gold this year so some sort of catch up was inevitable," said John Reade, analyst, UBS Investment Bank.
At its peak on Wednesday, silver was 7 percent higher than its level at the start of 2006. It gained 30 percent in 2005.
"It depends on whether we see any news about the ETF in the next few weeks. If not, I think it (the price) will probably fizzle out," said James Moore, analyst at TheBullionDesk.com.
Industrial metals prices traded around new record or multi-year highs in Wednesday's London Metal Exchange (LME) midday floor business on persistent fund buying.
Platinum at record highs
Platinum surged to a record $1,056 an ounce before dropping marginally to $1,054/1,058, compared with $1,047/1,051 in New York on Tuesday.
Demand for the metal, mainly used in autocatalysts to filter out carbon monoxide and harmful particles from exhausts, has been growing due to tighter emission standards, dealers said.
Supplies of platinum are expected to rise in South Africa, the biggest producer, but a strong local currency has raised operating cost and threatened new projects, analysts said.
South African stocks stormed to a fresh record high, with platinum duo Angloplat and Impala Platinum turning in star performances.
"Whilst the market is so incredibly bullish towards metals and speculators and investors are basically buying anything which is shiny, then I think platinum can keep grinding higher," Reade said.
Russia's Norilsk Nickel said on Tuesday it aimed to produce 690,000-700,000 ounces of platinum in 2006, against 751,000 in 2005. It did not explain the expected decline. The figures excluded output by its U.S. subsidiary.
James Courage, chief executive at Platinum Guild International UK Ltd, said platinum jewellery demand this year would be guided by its price and the state of the global economy.
"Demand is price-sensitive, but I think that obviously there are other factors involved and that is very much the state of the economies and the confidence of consumers and the industry," he said.
Jewellery demand is estimated to have slipped by more than six percent to 2.02 million ounces in 2005, Johnson Matthey, the world's biggest distributor of platinum, said in a recent report.
Gold
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