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Platinum eased after rallying to a one-year high, as traders weighed ongoing deficits against an uncertain demand outlook.
Prices jumped more than 8% in the previous three days, moving into overbought territory. The rally came as many in the industry gathered in London for an annual event to discuss the market outlook, and as the World Platinum Investment Council estimated a shortage of almost 1 million ounces this year.
Roughly 40% of platinum demand comes from autocatalysts, which filter harmful emissions from internal combustion engine vehicles. The global roll-out of electric vehicles, which don’t need autocatalysts, has weighed on the metal’s long-term outlook.
But with platinum prices largely range-bound around $1,000 an ounce in recent years, the prospect of struggling miners cutting back operations in top producer South Africa could support prices. The WPIC expects total global supply to decline about 4% this year.
A surge in the price of gold — the metal topped a record $3,500 an ounce earlier this year — has also bolstered the appeal of platinum as a substitute in jewelry. Platinum jewelry demand in China climbed 26% in the first quarter from a year earlier, while gold jewelry demand there fell 32%, according to the WPIC.
“The direction of travel for the platinum price is higher from here, however the exact timing remains difficult to call,” Morgan Stanley analysts wrote in a report, pointing to depressed supply and a mixed demand outlook.
Spot platinum fell 0.4% to $1,072.92 by 11:22 a.m. in London. Gold edged down to $3,303.63, also snapping a three-day gain that was helped by a weaker dollar. Silver and palladium declined.
(By Jack Ryan)
Read More: China’s platinum jewellery demand revives after gold rally, WPIC says
