Gold Rates Rise in India, Platinum Surges in Value

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The gold rate today in India moved by Rs. 400 ($5.72) in three consecutive sessions. With gold of 99.9 percent purity reaching Rs. 32,500 and gold of 99.5 percent purity reaching Rs.32,350 for every 10 grams, it seems that the local Indian market has finally caught on to the positive trend overseas.

Silver is following suit. Its rates have jumped by Rs. 125 to Rs. 38,125 for one kilogram upon fresh buying from industrial units and coin makers. However, Sovereign Gold is not influenced by these changes and is trading at a flat rate of Rs. 25,000 per piece of eight grams.

On an international scale, global gold prices hit a six month high on Wednesday as political and economic turbulence pushes investors toward safe-haven markets like gold and silver. The partial government shutdown in the United States only fueled the risk aversion, pushing many investors to seek the market hedge offered by gold.

Global analysts are increasingly bullish on the bullion, with investors expecting gold to hold higher support levels and, in the worst case scenario, stay at a low rate of $1,250.

In general, the precious metals market will trade for higher values; with silver, platinum and palladium benefiting from the upsurge in gold’s value. In their ‘Platinum Quarterly’ report, The World Platinum Investment Council (WPIC) reported on Wednesday that thanks to the persistent demand for industrial applications, platinum will rise in value, with a global demand to marginally outpace supply in 2019.

Another external market factor putting pressure on platinum prices is demand for automotive, especially in the electric vehicle industry. Heavy investments will be poured into producing battery to power electric vehicles, all of which require platinum during manufacture.

Supply for platinum will also increase in the year 2019 thanks to an optimized operational performance by platinum miners in South Africa.

This comes at a time when investors were losing interest in platinum, indicated by ETF holdings dropping to consistent five-year lows. In December alone, platinum futures dipped below $800 for an ounce, sliding back to their near 15-year lows that were first reached in August.

Platinum has primary application in catalytic converters, particularly in diesel vehicles. But as regulations around the world grow tighter, platinum is becoming increasingly attractive to investors.

While battery for electric vehicles doesn’t require platinum for operation, its alternative, zero emissions’ technology needs platinum per ounce. Hyundai, the Korean automobile manufacturer announced their $6.7 billion program to increase the production of fuel cells, going from 3000 in 2019 to 700,000 per year by 2030. This will require the use of platinum, which will push up its price.

The Korean government made a commitment to launching their own fuel cell fleet and charging stations. On the other hand, Canada has already started its first public Hydrogen fuelling station in August. In light of all the above developments, 2019 looks to be a promising year for platinum futures.