Platinum yesterday hit a 14-month high as an analyst's upgrade on the precious metal added to renewed optimism on United States vehicle sales and claims traders were making aggressive moves in the spot market.
Yesterday's spot price for platinum jumped US$14.70, to reach US$573.50 an ounce, mirroring a strong rise in sister metal palladium which has gained 11.69 per cent since Friday to reach US$363 an ounce.
Merrill Lynch analyst Mark Burridge said: 'The overall picture for platinum looks relatively rosy with an industry which at this time appears in balance and so supportive of prices for the next five years.'
He increased his long-term price target for platinum to US$500 from US$450 an ounce.
Prices for platinum and palladium - both used in catalytic converters - were also buoyed by Tuesday's surprisingly strong US durable goods orders, showing demand for cars, trucks and parts last month rose 7.5 per cent after falling 3 per cent in June.
Last year, about 32 per cent of newly mined platinum was used in vehicle exhausts, Mr Burridge said.
About 72 per cent of palladium goes into exhausts.
Some traders have blamed a squeeze on short positions in the metals' big price moves. Reuters reported an unidentified party placed massive buy orders on futures contracts traded in New York in a bid to jack up the price by triggering stop-loss buying.
SG Securities mining sector analyst in London Peter Davey said that with many traders away on summer holidays, it was easy for hedge funds or proprietary trading desks of investment banks to move the markets. 'There's no underlying reason why they should have jumped,' he said.
However, Merrill Lynch Investment Managers fund manager Evy Hambro said there were longer-term worries about the supply of palladium, and platinum in particular, from key producer South Africa.