Gold News

Gold/Silver Ratio Hits Pre-Covid Highs as Palladium Bounce Outpaces Platinum

GOLD, silver and platinum prices struggled against a rising US Dollar on Tuesday, leaving beaten-down palladium the best performing precious metal as it rallied 3.8% from yesterday's new 3.5-year low.
Global stock markets also struggled ahead of a key speech from Federal Reserve chairman Jerome Powell, expected to bring new comments on the US central bank's view of raising interest rates further to curb inflation, while longer-term US borrowing costs held at the highest since New Year at 3.65% on 10-year Treasury bonds.
With silver falling harder than gold over the last 4 sessions, the Gold/Silver ratio of the two former monetary metals today touched 84, approaching the peak of its mid-1990s to late-2010s range but still 1/3rd below its Covid Crisis peak of spring 2020.
Platinum's discount to palladium – formerly a premium almost without break, peaking at $1730 per ounce and averaging $650 this century until the diesel scandal starting in 2015 hit European demand for diesel passenger cars and therefore platinum autocatalysts – meantime held near $600 per ounce.
Chart of Gold/Silver ratio and Platinum-Palladium spread in $/oz. Source: BullionVault
Gold prices today fell back below $1870 per ounce, a 3-week low when hit in Friday's US jobs-data plunge and 4.6% beneath last Thursday's 9-month high.
Silver slipped to new 2-month lows at $22.15 per ounce, more than 10% beneath its 9-month high of Thursday, also reached after the US Federal Reserve raised Dollar interest rates by just 0.25-percentage points as expected but warned that "ongoing [interest-rate] increases will be appropriate."
Platinum meantime slipped to 3-month lows near $966 per ounce after Gwede Mantashe, Minister of Mineral Resources and Energy in the metal's No.1 producer nation of South Africa, assured delegates at this year's Investing in African Mining Indaba in Cape Town that he has a plan to resolve the power supply crisis hitting the sector, plagued by years of failing infrastructure and load-shedding at state-owned energy monopoly Eskom.
Sister-metal palladium – also finding its primary use in autocatalysts to reduce harmful emissions from fossil-fuel engine – in contrast leapt $65 per ounce from Monday's bottom at $1560, the lowest US Dollar price since September 2019.
Whether the white precious metal is "coming back into favour [remains] questionable," said Rhona O'Connell of brokerage StoneX on a webinar Monday, pointing to "potential inventory build" at platinum mining producers but also to Europe's forthcoming Euro 7 emissions standards, which – if governments offer incentives to retro-fit more efficient autocatalysts – "will benefit palladium substantially."
Alone among the 4 main precious metals, palladium is forecast to fall on its annual average price in 2023 by analysts entering the London Bullion Market Association's Forecast Survey, with the average prediction seeing a 14.3% drop from 2022 to $1809.80 per ounce across the year as a whole.
In contrast to palladium, platinum has other industrial applications besides internal combustion engines, and as the ICE faces long-term decline, "The Inflation Reduction Act places the US at the forefront of the hydrogen economy," says a report from German refining group Heraeus, favoring platinum-iridium catalysts for PEM production of low-carbon hydrogen, ready for generating electricity through platinum-based fuel cells.

Adrian Ash

Adrian Ash, BullionVault Gold News

Adrian Ash is director of research at BullionVault, the world-leading physical gold, silver and platinum market for private investors online. Formerly head of editorial at London's top publisher of private-investment advice, he was City correspondent for The Daily Reckoning from 2003 to 2008, and he has now been researching and writing daily analysis of precious metals and the wider financial markets for over 20 years. A frequent guest on BBC radio and television, Adrian is regularly quoted by the Financial Times, MarketWatch and many other respected news outlets, and his views from inside the bullion market have been sought by the Economist magazine, CNBC, Bloomberg, Germany's Handelsblatt and FAZ, plus Italy's Il Sole 24 Ore.

See the full archive of Adrian Ash articles on GoldNews.

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