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Platinum won't keep gaining against Gold

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NEW YORK (Scrap Register): Platinum’s discount against gold has fallen to the lowest level since May but may not narrow much further since supply/demand fundamentals are still working against platinum, said analysts with Metals Focus.

At one point this week, the discount was below $370 an ounce. Sub-$800 platinum prices in late summer encouraged bargain hunting, Metals Focus says. The metal also benefitted as traders favored so-called risk assets generally, pushing the S&P 500 to record highs and also boosting industrial base metals.

“By contrast, the lack of risk aversion has weighed on gold. This in turn partly explains the recent narrowing of the discount between the two metals. That said, while platinum prices should rise over the short to medium term, we do not expect this gap to fall significantly further,” Metals Focus added.

This is mostly due to platinum’s largely unsupportive fundamentals. Production is holding up, with meaningful supply cuts not expected for a few more years, thus Metals Focus sees 2018 global mine supply easing by only 2% to 6 million ounces.

A similar decline of 2% is predicted for global platinum demand. Here, the two largest areas are automotive and jewelry, with respective shares of 41% and 28% of fabrication demand in 2018. Both are facing downward pressure, Metals Focus noted.

For autos, the issue is lost market share for diesel-powered vehicles, which require platinum for auto catalysts.

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