Metals Focus: Platinum May Rise With Gold; Palladium To Remain Strong

(Kitco) Wednesday, March 20th, 2019 . Metals Focus looks for platinum to rise into year-end largely on the coattails of gold, but says platinum won’t catch up with high-flying sister metal palladium any time soon. Palladium hit successive record highs just above $1,600 an ounce Tuesday and Wednesday, while platinum also firmed. Both metals are used in automotive catalysts. “The contrast with the platinum price could not be sharper,” says Metals Focus, noting late Tuesday that while platinum has ticked higher by some 9% since August, the metal was at a 14-year low back then. Meanwhile, palladium has nearly doubled from the August low. “In our view, the explanation both of a record high palladium price and the underperforming platinum price reflects the contrasting dynamics of each metal’s underlying supply and demand,” Metals Focus says. The palladium market had a supply-demand deficit of 993,000 ounces last year, and the consultancy looks for a deficit of 789,000 this year. “In our view, palladium enjoys the strongest fundamentals across the major precious metals and therefore the ongoing stock decline underpins the strength in the palladium price,” Metals Focus says. Meanwhile, Metals Focus looks for a 2019 surplus of 650,000 ounces for platinum. “With regards to the 2019 price outlook, we therefore expect palladium to generate further upside, surpassing $1,700 before year-end,” Metals Focus says. While platinum may “struggle with unsupportive fundamentals,” the firm does look for improvement in prices along with gold. “We expect gold to eventually reach $1,400, but the upside will be concentrated towards year-end,” Metals Focus says. “This in turn should help deliver firmer platinum prices, which could touch $1,000 towards end-year. However, two points are worth noting. First, we expect platinum’s discount to gold to remain above $400 this year. Second, we believe that palladium’s stronger fundamentals will see it continue to trade at a substantial premium to platinum at around current levels.”