The decision by the US central bank to cut interest rates by a quarter of a percentage point to just one per cent may spark a recovery that will boost demand for platinum according to South African-based analysts.

Speculation that the cut in US interest rates would fuel a recovery in the world's biggest economy, led a number of experts to anticipate a rise in demand for the precious metal, a fact reflected in the recovery of the price of platinum during the last 24 hours.

In a statement announcing the rate cut, the Federal Open Market Committee said it 'judged that a slightly more expansive monetary policy would add further support for an economy which it expects to improve over time'.

According to Reuters hopes are rising in South Africa that a recovery in the US economy may spur demand for commodities such as platinum.

The automotive and jewellery sectors in particular are dependent on the strength of the US economy.

Platinum demand in the American autocatalyst industry accounted for 570,000 oz of platinum in 2002 while American jewellery supplies totalled 310,000 oz.

Luxury items such as jewellery rely heavily on a positive economic outlook, a fact underlined by the difficulties posed by the downturn in the hugely important Chinese market as a result of the SARS virus.