Zurich Cantonal Bank's platinum-backed exchange-traded fund (ETF) ZPLA.S has increased its holdings over the last two months, it has been revealed.

According to Reuters, 23,800 oz of platinum have been acquired by the ETF since the end of November, bringing its total holdings to 129,000 oz.

This points to greater demand for shares in the fund and therefore for platinum as they are physically-backed.

A Johnson Matthey report suggests fund investors are more likely to buy platinum at a time when the price is rising.

This acts to put further upward pressure on the price of platinum, and the market is further imbalanced when the platinum price starts to fall as fund investors have in the past shown a willingness to sell heavily when the value of their stocks has started to decline.

Conversely, investors in palladium-backed funds - such as Zurich Cantonal Bank's ZPAL.S - tend to be less influenced by short-term price fluctuations than their platinum-focused counterparts, with long-term movements given more of a consideration.

Zurich Cantonal Bank's holdings of its palladium ETF ZPAL.S rose by 8.6 per cent in December and January, leaving the total held at 516,100 oz.

Sources:

ZKB gold ETF holdings rise 9 pct from end-Nov, 22/01/09
http://www.reuters.com/article/rbssFinancialServicesAndRealEstateNews/idUSLM74384420090122

The progress of platinum group metal exchange traded funds (ETFs), 23/01/09
http://www.platinum.matthey.com/media_room/11642008903191.html