Platinum, Palladium Flagged as Stars of 2011

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"Demand from emerging markets continues to grow."

Last year's winner in price terms, palladium, is set to extend its rally still further in 2011 as demand from emerging markets like China continues to grow, but platinum, which has lagged its sister metal's gains, is also in the spotlight.

"We forecast that once again palladium will remain the best performing precious metal, but we also expect platinum will play catch-up from its lacklustre 2010 showing," said UBS analyst Edel Tully in an end-of-year report.

Palladium is on track for a whopping 82% price rise this year, outstripping platinum's 16% rise and gold's 25% climb. Only silver, up 72% so far this year, has come close to matching its performance.

Palladium's rise is even more impressive given that it also more than doubled in price in 2009. The metal has been supported in a rebound in demand from the palladium-hungry Chinese car market, and by talk of dwindling Russian stockpile sales. Chinese car sales, which surpassed those of the United States to make China the world's biggest car market last year, are expected to keep rising in 2011, boosting palladium demand. UBS expects the metal to move into a deficit of some 231,000 ounces next year from a surplus of 18,000 ounces in 2010, and to widen that deficit to 563,000 ounces in 2012.

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