The market for exchange-traded funds (ETFs) that are linked to precious metals could be in for a hard time after the recovery of the dollar is beginning to influence the platinum and palladium market.

Platinum and palladium ETFs were set-up last year and after enjoying healthy growth in the first six months of 2008, the recovery of the dollar could bring bad news.

The holdings of platinum ETFs have gone into a sharp decline after platinum prices dropped by 42 per cent.

From a high of 484,000 oz in July, the holdings of platinum for ETFs have dropped by 200,331 oz to 283,669 oz, the Financial Times reports.

Many investors have been surprised by the fall as some believed the precious metals market to be the best supported by fundamentals.

Delays in production as a result of a loss of power supply have been underpinned by tighter emissions standards in the automotive industry meaning that a demand for platinum remains strong.



Source:

Precious metal ETFs under pressure, 19/08/08
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