Even though platinum has jumped up by nearly $75-80 per troy oz last week on Fed news, global prices may remain weak during the first half of year 2009 mainly due to slump in the auto sector globally with sales collapsing in western economies and slowing sharply in the emerging economies.

Platinum prices in the European markets have so far gained fresh ground and rose by 20% nearly at $1,130-level on Monday from $940 quoted on January 2 due to the physical buying in Asia and through the European Exchange Traded Funds (ETF).

Platinum was the second best performer amongst the precious metals complex in 2008 with prices rising by 19% year-on year.

Price is expected to average $996 per troy oz in 2009, down from $1,576 an ounce last year, according to the latest survey done by London Bullion Merchants’ Association (LBMA).

“We expect platinum prices to remain subdued during the first half of 2009. Weak fabrication demand from the auto industry is expected to weigh on prices,” said Jeffrey Christian, CPM Group.

However, prices could find some support from a cut back in mine supply. Demand in the auto sector is forecast to improve toward the end of this year. In anticipation of this improvement, platinum prices could begin to rise in the second half of 2009, he added.

“In the current situation, no buying can be expected either from the car industry or in times of a severe global recession from the second most important demand source; the jewellery sector,” Bhargava Vaidya, a leading bullion analyst said.

“The situation is however going to change in the latter part of the year. With a potential recovery of the industrial off-take, existing production curb, many new projects put on hold and with a possible rise in investor interest the platinum price may be able to recover to $1,200 an ounce again,” he added.

“Platinum should continue to build a base between $700 and $1,000 an ounce in the coming months. Any test of the lower end of that range is in our view not sustainable as these prices are way below the production costs of a substantial portion of South African output,” Vaidya said.