Growing uncertainty in global markets and troubled production in South Africa pushed up prices of platinum and gold to record highs last week. On 25 February 2008, platinum futures for April settled at $2153.5, after reaching a record of $2182.2 on 22 February. Gold futures eased down to $940.5 on 25 February after a high of $949.2 last week.
Platinum and gold futures
Platinum has gained more than 30% in 2008 over disrupted production due to power shortages in South Africa, the world's biggest producer. Worries of an impending US recession meanwhile have pushed up gold futures prices.
Have precious metal prices reached a peak or will they continue to rise? Some analysts have suggested the problems in South Africa will worsen and that the platinum market deficit could reach about 400,000 ounces this year, compared to a shortfall of 280,000 ounces in 2007. Mining giants Anglo Platinum and Lonmin have reduced production forecasts for 2008 (the former cut 2008 forecasts to 2.4 million ounces down almost 15% from 2006).
Elsewhere, takeover talk between mining giants BHP Billiton and Rio Tinto, and Vale and Xstrata, is another factor keeping the sector lively.
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The above comments do not constitute investment advice and IG Index accepts no responsibility for any use that may be made of them.
Updated: 26 February 2008