Platinum, Palladium Gain on Speculation of Strong Auto Demand By...

Platinum, Palladium Gain on Speculation of Strong Auto Demand

By Millie Munshi

May 18 (Bloomberg) -- Platinum and palladium futures gained in New York on speculation that demand from the auto industry will be strong.

Automaker demand for platinum grew 35 percent last year and palladium demand gained 33 percent, London-based Johnson Matthey Plc said this week. Both metals are used in catalytic converters to reduce pollutants produced by cars. Before today, platinum had gained 15 percent this year, partly on speculation that industrial demand for the metal will gain.

``Fundamentals are still strong,'' said Frank McGhee, head metals trader at Integrated Brokerage LLC in Chicago. ``The market is holding on in anticipation of good demand.''

Platinum futures for July delivery gained $6, or 0.5 percent, to $1323.90 an ounce at 12:01 p.m. on the New York Mercantile Exchange. Prices have gained 2 percent in the past year.

This week, HSBC Securities (USA) Inc. raised its 2007 platinum forecast by 6.5 percent. The metal will average $1,305 an ounce this year, up from a previous forecast of $1,225 an ounce, HSBC analysts led by James Steel wrote in a report on May 15.

``Our optimism is based on increasing physical demand, much of it from the auto sector,'' Steel said.

Palladium for June delivery gained $4.35, or 1.2 percent, to $364.75 on the Nymex. Before today, the metal had gained 6.5 percent this year.