Gold News

Platinum Price Hits New 4-Year High But 'Gold Has Peaked' as Rising Rates Greet Biden

TWO-WEEK highs in gold and silver prices following Joe Biden's swearing-in as US President were overshadowed Thursday by a spike to new multi-year highs in platinum.
 
All three precious metals then retreated as commodity prices fell, edging back $15 per ounce in gold to $1860 while silver dipped 40 cents to $25.60 and platinum fell $20 to $1136 before rallying back $10.
 
The US Dollar meantime slipped further from last week's 1-month high on the currency market, while longer-term interest rates in the bond market rose as Democrat politicians in Washington started to debate how to implement the new President's $1.9 trillion stimulus promises.
 
US stock markets opened Thursday flat after closing at yet more new all-time highs on Wednesday's inauguration, sparsely attended amid ultra-tight security due to Covid restrictions and the pro-Trump violence of 6th January.
 
" Gold has peaked," reckons Netherlands bank ABN Amro's strategist Georgette Boele, writing over 5 months after the yellow metal's $2075 top, "[but] the outlook for platinum remains positive."
 
"We now expect slightly higher US nominal and real [bond] yields, a less dovish Fed and a moderate rise in the Dollar – all negatives for gold prices," she writes, cutting ABN's end-2021 target from $2000 to $1700 per ounce.
 
But because ABN has "substantially upgraded [its] outlook for the US economy" and therefore global industrial demand, "a strong Chinese economy will probably also result in higher demand for platinum jewellery" and that should mean rising platinum prices.
 
"Third, we expect higher consumer demand for cars this year [and] more stringent car emission regulation results in more platinum content for car catalysts...[Overall] we expect demand to outpace supply."
 
Platinum bullion price, last 20 years. Source: BullionVault
 
Finding two-fifths of its end-use demand from diesel-engine catalysts in the 3 decades prior to 2020, platinum investing became the single largest source of demand last year.
 
Platinum prices spiked Thursday lunchtime in London to their highest since the peak of August 2016, touching $1156 per ounce.
 
With production of platinum-group metals "concentrated in South Africa, notes the latest weekly analysis from specialist consultancy Metals Focus, "2020 supply was disproportionally disrupted by the country's strict lockdown, [with] restrictions on mining not fully lifted until the beginning of June."
 
That month then brought the unexpected shutdown of a major processing plant, which combined with the Covid restrictions saw "platinum and rhodium output falling by around 21% year-on-year".
 
Now in the White House, Biden immediately began rolling back 'isolationist' policies from Donald Trump's presidency, as well as issuing new executive orders to try stemming the Covid pandemic's winter wave.

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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