PGMs Rally to Highest in 1-1/2 Years, Gold Ticks Up

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"Analysts expect platinum and palladium. . .to rise further, after gaining 14% and 28%, respectively since late December"

Platinum and palladium prices rallied to their highest in over 17 months on Monday, helped by investment demand after the launch of U.S.-based ETFs this month.

Analysts expect platinum and palladium, used in catalytic converters, to rise further, after gaining 14% and 28%, respectively since late December.

Spot platinum rose as high as $1,626/oz, its highest since August 2008, and was at $1,619/oz by 12:04 GMT, versus $1,596.50/oz late in New York on Friday.

Spot palladium rose as high as $457.50/oz, its highest since early July 2008, and was $455 from Friday's $452.50/oz.

"We see follow-on buying from the launch of ETFs. There's good interest in both metals," said precious metals strategist Tom Kendall at Mitsubishi. "For palladium $500/oz is a very obvious target and wholly achievable in the three to six months."

Kendall said the market was more bullish on palladium than platinum because of the former's fundamentals. Palladium is cheaper than platinum and is likely to be preferred by the auto industry as it recovers.

"The extraordinary popularity of these investment vehicles illustrates: a) consensus over the favorable fundamental outlook for the PGMs; and b) the appetite for investment in the precious metals space has yet to be satiated," Morgan Stanley said in a research note.

Gold prices were up slightly but rises were limited as the euro remained under pressure due to Greece's financial problems and concerns over their potential impact on the single currency.

Spot gold inched up to $1,135.85/oz compared with $1,129.90/oz late in New York on Friday. U.S. gold futures for February delivery were at $1,135.90/oz, up 0.5%.

"Until we get fresh momentum based on an event or data, gold is going to continue to struggle as long as the dollar is being preferred versus the euro," Kendall said.

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