UPDATE 7-Platinum ends sharply higher on ETN launch, gold up

(Recasts, adds analyst comments, closing prices, adds NEW YORK to dateline)

NEW YORK/LONDON, May 9 (Reuters) - Platinum ended sharply higher on Friday as the launch of U.S. platinum exchange-traded notes boosted sentiment, while gold also finished up on record crude oil prices.

Investment bank UBS UBSN.VX launched two ETNs offering long and short trading strategies in platinum. ETNs, unlike exchange-traded funds, do not purchase physical platinum to back the number of shares sold. [ID:nN09540232]

The two ETNs -- UBS E-Tracs Long Platinum ETN PTM.P and UBS E-Tracs Short Platinum ETN PTD.P -- started trading on Friday on the NYSE Arca platform.

“It won’t have an impact on the availability of physical metal nor on lease rates. Fundamentally you cannot justify the kind of price move we have seen,” said Tom Kendall, metals strategist at Mitsubishi Corporation.

But it offers another route by which U.S. mutual and pension funds, which cannot directly invest in commodity derivatives, can gain exposure to platinum, he added.

Spot platinum XPT= rose to a high of $2,095 an ounce and was last at $2,074/2,094 by New York's last quote at 2:15 p.m. EDT (1815 GMT), compared with $2,008.50/2,028.50 in New York late on Thursday.

U.S. July platinum contract PLN8 on the New York Mercantile Exchange ended up $59.50, or 2.9 percent, at $2,101.80 an ounce.

Ralph D’Esposito, COMEX floor trader at RJ Futures in New York, said the ETN news gave platinum an additional boost this week, and he also cited strong support from the physical platinum market and robust buying by the trades.

Dealers also reported platinum purchases in Japan and Europe as auto makers stocked up for their second-quarter requirements, but the metal was still more than $200 below a lifetime high of $2,290 an ounce hit on March 4.

“People just read about the new products and started buying platinum, but I think it’s overdone here,” said Wolfgang Wrzesniok-Rossbach, head of marketing and sales at Heraeus, a German precious metals trading group.


Platinum’s major industrial use is in making autocatalysts, particularly diesel catalysts, as it helps clean environmentally damaging fumes from exhausts. It is also used in jewellery.

“While the UBS ETNs do not directly invest in the underlying, the reality is that the market makers of the product need to hedge their short exposure to investors who are very likely to be long given the bullish medium term outlook,” J.P. Morgan said in a report.

“As such we can expect that investors and market makers will continue to be net buyers of platinum.”

In other markets, the most active Tokyo platinum contract jumped by the daily 300 yen limit. The benchmark contract for April 2009 delivery <0#JPL:> rallied to 6,703 yen per gram, but still below a record of 7,427 yen hit on March 6.

Spot gold XAU= hit a one-week high of $889.80 an ounce on a weaker dollar and record-high oil prices, but slipped as oil retreated. The metal was last quoted at $886.30/888.30 at 2:15 p.m., against $881.40/882.60 in New York late on Thursday.

“We know something is wrong. Is gold too cheap or is oil too expensive? One of the two is true. I would think that oil is driving everything, really,” said Leonard Kaplan, president of Prospector Asset Management at Evanston, Illinois.

In the physical market, steady purchases from jewellers in Indonesia, Thailand and Vietnam pushed up premiums for gold bars to 80 U.S. cents an ounce to the spot London prices in Singapore, from 75 cents last week <GOLD/ASIA1>.

In other precious metals, gold futures for June delivery GCM8 on the COMEX division of the New York Mercantile Exchange settled up 3.70 at $885.80 an ounce.

Silver XAG= fell to $16.80/16.86 from $16.85/16.91 an ounce, while spot palladium XPD= was up at $439/447 an ounce, higher than its Thursday close of 430.50/438.50 an ounce. (Editing by Matthew Lewis)