January 3, 2017 / 12:51 PM / 7 months ago

PRECIOUS-Platinum and palladium jump as investors gear up for 2017

3 Min Read

* Platinum group metals surge
    * Dollar climbs 0.5 pct against the euro
    * Gold steadies after worst quarter since Q2 2013

 (Recasts, updates prices, adds comment)
    By Jan Harvey
    LONDON, Jan 3 (Reuters) - Platinum and palladium jumped by
more than 4 percent on Tuesday as investors scrambled for
position as the new year got under way and gold steadied after
posting its biggest quarterly loss in more than three years.
    The themes of late 2016 appeared to be persisting in the
wider markets, with equities bouncing while the dollar posted
its biggest rise in three weeks.  
    Spot platinum was up 4.6 percent at $940.80 by 1500
GMT, while sister metal palladium rose 4.7 percent to
$710.30.
    "The repositioning in the futures market in the dying weeks
of last year saw in platinum a rebuilding in the gross short
position, and at the same time long positioning remaining fairly
steady," said Mitsubishi analyst Jonathan Butler. "Right now I
think this is some short-covering driving prices higher.
    "It's the start of the year, and there are some funds
rebalancing their portfolios. There might be some niche funds
that are interested in these metals, so that is part of the mix
as well."
    Palladium was the best-performing precious metal last year,
with the price rising 20 percent for its biggest annual gain in
six years. Platinum lagged gains in the wider complex, however,
ending 2016 only 1 percent higher. 
    Both metals are widely used in autocatalyst manufacturing,
and are more exposed than gold to the economic cycle. 
    Spot gold was flat at $1,151.66 an ounce, while U.S.
gold futures for February delivery were up 90 cents at
$1,152.60.
    The metal fell sharply in the wake of Donald Trump's victory
in November's U.S. presidential election, sliding by more than
12 percent in the fourth quarter. 
    Trump's victory boosted the dollar and sparked a sharp rally
in bond yields, lifting the opportunity cost of holding
non-yielding gold and blunting investors' appetite for the
metal.
    "The market has carried the theme of higher dollar, yield
and stocks into 2017 -- a formidable challenge to gold," said
Saxo Bank's head of commodity research, Ole Hansen. 
    Indications from the U.S. Federal Reserve that it would
press ahead with further interest rate rises this year are
buoying the dollar and pressuring gold.
    A strong start to 2016 meant that gold still managed to end
last year with its first annual gain since 2012, rising by 8.5
percent.
    Silver was up 0.8 percent on Tuesday at $16.06 an
ounce. 

 (Additional reporting by Nallur Sethuraman in Bengaluru;
Editing by David Evans and David Goodman)

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