Investor preference for palladium over platinum is likely to remain for some time, according to the Nov. 4 Metals Focus, a precious metals weekly issued by Valcambi Suisse.
Platinum prices began to rebound, but then fell along with gold, negating any gains, according to Valcambi.
“By contrast, palladium bucked the trend in the precious metals complex, with prices consolidating at sub-$800 levels,” according to Valcambi.
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The platinum price drops have pushed the platinum:palladium ratio down to a 13-year low of 1.54:1 in early November, compared to 1.96:1 at the start of year.
Valcambi anticipates the ratio between platinum and palladium to drift even lower.
Several factors contribute to platinum’s underperformance, according to Valcambi, including the strengthening of the U.S. dollar.
“A deteriorating economic outlook for Europe has certainly undermined interest in platinum,” according to Valcambi. “Indeed, while a sluggish European economy has remained a headwind for platinum prices, robust palladium fabrication demand has provided fuel for the metal’s recent rebound.”
According to Valcambi, in the U.S., the top six auto manufacturers reported a 6 percent increase in October sales, connected to improving consumer confidence and low fuel prices, confirming that the U.S. market is on track this year to post its best performance since the financial crisis.
Platinum and palladium are both used in automobile catalytic convertors, for emissions controls. Above-ground supplies of palladium are higher than for platinum, according to Valcambi.
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