Platinum Price Make Metal Tight Supply and Cheap Price for Gold

Platinum prices may have reached a “turning point,” given the metal’s tight supply and cheaper price relative to gold, according to a note Wednesday from Ross Norman, chief executive officer at London-based bullion brokers Sharps Pixley.

At last check, the December contract for gold GC1Z was up $22 at $1,683 an ounce on the Comex division of the New York Mercantile Exchange. January platinum PL2F traded at $1,554.40 an ounce, up $35.60.

With the economic outlook and demand prospects still grim for platinum in the short term, platinum buyers are “adopting a wait-and-see approach before jumping into the platinum market,” said Norman. But “platinum supply remains tight relative to gold, with platinum annual supply amounting to only about 8% of total gold production” and above-ground platinum would last for about 1 year.

He said the metal is also among the 5 commodities least vulnerable to recession, according to Barclays analysts who recently ranked commodities by apparent vulnerability to global recession, based on such factors as recent price changes and leverage to emerging market demand. If prices can successfully rebound from the $1,500-$1,550 range, “industrial users such as auto makers and jewelry producers should emerge as buyers,” he said.

For now, platinum’s performance hasn’t been very impressive. Year to date, platinum futures have fallen about 12%, while gold prices have gained around 18 percent.

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