Quarterly Outlook
Equity outlook: The high cost of global fragmentation for US portfolios
Charu Chanana
Chief Investment Strategist
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As gold pauses, is platinum ready to shine for investors?
Ole Hansen
Head of Commodity Strategy
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Key points:
- Platinum, an almost forgotten metal that has for a long time been struggling for momentum, shows signs of life with key upside levels being challenged.
- Having traded sideways for the past decade while gold surged higher in recent years due to strong central bank demand, the ratio between the two metals has during this time gone from 1:1 to 3.2:1. That is, one ounce of gold now costs the equivalent of 3.2 ounces of platinum.
- The positive sentiment is being supported by a report forecasting a deepening market deficit, with supply outstripping demand by close to one million troy ounces, marking the third successive year where above-ground inventories are being drawn upon.
- A resurgence in Chinese demand for jewellery, bars, and coins culminated last month when Chinese jewellers and investors imported the largest amount in a year due to its relative stability and cheapness compared to gold.
In a recent update, we touched base on platinum, an almost forgotten semi-industrial metal that, for years now, has been struggling for momentum, in the process being boxed into a tightening range, which sooner or later will yield a breakout. Platinum, primarily mined in South Africa while attracting most of its demand from the production of catalytic converters and laboratory equipment, trades historically cheap, not least compared with gold, which, supported by strong central bank demand since 2022, has seen its value over platinum rise to hit a peak a month ago of 3.6 ounces of platinum to one ounce of gold. Since then, the ratio has narrowed to around 3.2, with platinum gaining 5% while gold has lost close to 6%, with the white metal benefiting from the 90-day US-China trade truce, brightening the economic outlook, while gold, for the same reason, has seen its haven appeal deflate, triggering some profit-taking. Eventually, the narrowing trading range—which is currently being challenged to the upside—will yield a breakout, and only then are we likely to see whether demand from technically focused traders looking for fresh momentum will be enough to push prices higher, or whether gold’s appeal as the ultimate safe haven remains too strong. Having traded sideways for the past decade, averaging USD 955 per troy ounce during this time, a change will require a breakout, and for that to happen, we are focusing on resistance around USD 1,012, which is being tested and challenged today, and ultimately on the shown downtrend from 2008, which this May on a monthly close is located around USD 1,025
The positive sentiment being supported by fundamental news after the World Platinum Investment Council, in their latest Platinum Quarterly report, forecast a deepening market deficit with supply outstripping demand by close to one million troy ounces, marks the third successive year where above-ground inventories are being drawn in order to meet demand from the automotive sector, and not least a resurgence in Chinese demand for jewellery, bars, and coins, culminating last month when Chinese jewellers and investors imported the largest amount in a year, due to its relative stability and mentioned cheapness compared to gold.
In the meantime, speculators in the COMEX futures market, which according to CTFC’s widest definition used in their weekly Commitment of Traders report, are Managed Money accounts such as hedge funds, and Other Reportables unsurprisingly, given the lack of direction—continue to trade platinum with a neutral to a small long bias. Meanwhile, longer-term focused investors using platinum-backed ETFs registered in the West currently hold 3.18 million troy ounces according to data compiled by Bloomberg, up from an April 2024 low at 2.89 million, but well below the 2021 peak near 4 million ounces.
Finally, note that London Platinum Week 2025, organised by the London Platinum and Palladium Market (LPPM), is being held this week, from May 20 - 22, and it may lead to some additional attention, as it brings together stakeholders such as mining companies, refiners, traders, analysts, and service providers to discuss industry developments and future strategies.
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