Platinum climbed to $1,650 this week as China launched physically settled futures and options, increasing transparency and attracting industrial, jewelry, and investor participation, Commerzbank's commodity analyst Carsten Fritsch notes.

China launches physically settled Platinum and Palladium futures

"The Platinum price rose significantly this week. Yesterday, it reached its highest level in over a month at $1,650 per troy ounce. In addition to expectations of interest rate cuts, news from China was also responsible for this. Trading in Platinum and Palladium futures contracts began yesterday on the Guangzhou Futures Exchange. These are physically settled, which is likely to generate corresponding demand for Platinum and Palladium."

"The exchange will publish daily data on the stocks stored in its warehouses, which should significantly increase transparency. The futures contracts, denominated in local currency (RMB), offer buyers in China the opportunity to hedge against price fluctuations. The World Platinum Investment Council expects the futures contracts to be of great interest to end users in the industry and the automotive sector due to the possibility of physical delivery of Platinum and Palladium in powder form as well as bars and ingots."

"The futures contracts are also likely to be of interest to the jewelry industry for hedging purposes and to investors seeking to participate in market developments in China. In addition to trading in futures contracts, trading in options on both Platinum metals will also commence today on the aforementioned exchange."