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By Yuliya Fedorinova and Ranjeetha Pakiam
(Bloomberg) – Platinum 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 are supporting prices, said Margaret Yang, a strategist at DailyFX. Platinum has gained 21% this year, narrowing the steep discount with sister-metal palladium, which was the star performer over the two previous years.
“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.
After years of surpluses, Covid-19 mine shutdowns in South Africa saw the platinum market deficit widen to 400,000 ounces in 2020, Johnson Matthey said in a report last week. While the market could return to a surplus this year, disruptions at a key refinery in the country improved the immediate outlook for the metal.
The outlook for prices will partly depend on whether investment demand – from those expecting a catch-up to gold and palladium – remains 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 immunisation programs globally, and the impact on growth. US markets were shut for Presidents’ Day, while exchanges in China, Hong Kong and Taiwan were also 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.
Spot gold fell 0.3% to $1,818.94 an ounce in London, after climbing 0.6% last week. Silver and palladium advanced. The Bloomberg Dollar Spot Index declined 0.1%.
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