Gold Regains Price Lead Over Platinum

Wednesday, 16 January 2013
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Published in Gold Investing

Only one day removed from topping gold in the price category, platinum was back down below the price of gold, as the yellow metal experienced yet another jump in price while platinum gave back some of its previous gains on rising supply concerns from major producer South Africa.

Platinum had initially gone up in price for the sixth straight day yesterday after the world's number one producer of the metal, Anglo American Platinum, announced that an operational overhaul would cost 14,000 jobs and an estimated 400,000 ounces of production. After hitting that high yesterday, platinum was back down below gold today, as the yellow metal held its ground nicely.

Spot gold was little changed at $1,676.04 an ounce at earlier today against $1,678.50 late on Tuesday, while spot platinum was down 0.4 percent at $1,671.50 an ounce. The two metals hit parity for the first time since March on Tuesday. While gold did not experience a big spike upwards in price, the yellow metal is still going strong, and has now gone up in price for four straight sessions.

"The trend in gold and platinum has been aggressively upwards in recent sessions," Standard Chartered analyst Dan Smith said. "We (saw) a little bit of dollar strength today and platinum is running through a strong technical resistance and also some profit-taking.

"It's just a consolidation of recent gains but any pullback in platinum should however be seen as a buying opportunity for consumers at the moment."

Platinum was however still firmly underpinned by news that Amplats staff had downed tools on Wednesday, with the company saying workers were on illegal strike at three of its South African mines. This caused platinum to lose some if its price gain from previous sessions that had taken it so high it had even passed gold.

Speculation that Amplats' overhaul may cost fewer platinum ounces than originally suggested prompted some investors to cash in gains. This also played a part in the price drop of platinum.

"Our equity analysts view the net impact on the platinum market balance to be smaller, at about 250,000 ounces, which fits quite well with what the market was expecting," UBS analyst Joni Teves said in a note.

"It is not a huge surprise that the $1,700 psychological mark offered decent resistance, given platinum has not really been able to sustain prices above this level since the September 2011 selloff," she added.

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Jeremy Holcombe

Jeremy is a seasoned finance writer who has been studying the gold and silver industry for many years. His vast knowledge in the precious metals sector led him to Goldco Direct, where he is now one of their most recognized writers both on the site and around the web. Along with being a senior Precious Metals writer for Goldco Direct, he is frequently featured on many financial sites on the internet where they tap into his knowledge about gold. Jeremy is passionate about educating investors about the yellow metal as its price continues to rise to record breaking levels.