Platinum futures surged above $1,300 an ounce for the first time in more than six years on bets that a recovery in industrial demand and stricter emissions rules will tighten supply of the metal. Gold edged lower.
Tougher pollution regulations requiring vehicle makers to use more platinum in catalytic converters is supporting prices, said Margaret Yang, a strategist at DailyFX. Platinum has gained 20% this year as the discount to sister-metal palladium has also raised expectations it will see greater use. The outlook was further improved by disruption at a key South African refinery, which likely will keep the market in deficit this year, according to the World Platinum Investment Council.
“Platinum has largely outperformed gold since November 2020 as reflation hopes and a projected recovery in global auto sales brightened the demand outlook for the white metal,” said Yang.
Platinum futures rose as much as 4% to $1,309 an ounce. Spot platinum rose as much as 3.4% to $1,298.56 an ounce, the highest level since 2014, and traded at $1,298.14 as of 11:40 a.m. in London.
Strong investment demand from those expecting a catch-up to gold and palladium also has been supportive.
”Platinum got attention from financial investors,” said Kirill Chuyko, a strategist at BCS Global Markets. “It’s getting its momentum now due to speculative demand.”
Gold slipped as investors weighed the slowing pace of coronavirus infections, as well as immunization programs globally, and the impact on growth. The pace of the outbreak in the U.S. continued to ease as the week-to-week average hit the lowest in almost four months, while infection and death rates have dropped in India. U.S. markets are shut for Presidents’ Day, while exchanges in China, Hong Kong and Taiwan also are closed Monday.
The precious metal has retreated about 4% this year amid higher Treasury yields, which diminish the appeal of bullion because it pays no interest. Still, the haven asset has gained support from bets that more stimulus will be inflationary and that a recovery from the pandemic will weigh on the dollar.
Gold is in danger of “becoming the forgotten metal,” said Ole Hansen, head of commodity strategy at Saxo Bank A/S. “We maintain the view that rising yields will be driven by rising inflation, thereby keeping real yields low.”
Spot gold fell 0.2% to $1,819.81 an ounce in London, after climbing 0.6% last week. Silver and palladium advanced. The Bloomberg Dollar Spot Index declined 0.1%.