Platinum price below $1,000/oz for first time since February 2009
Johannesburg-South Africa (July 17) Platinum fell below the $1,000 an ounce mark on Friday, leaving prices in triple-figure territory for the first time since February 2009, as investors continued to lose faith in its fundamental demand outlook.
Weakness across the precious metals in the face of a rising dollar — set for its biggest weekly gain in two months — is also weighing on prices, with gold hitting eight-month lows and palladium at its lowest since late 2012.
Spot platinum fell to a low of $998.50/oz, down 0.7%, at 10.41am GMT.
Output from South African platinum producers has been rising this year after crippling strike action in 2014. Top player Anglo American Platinum reported a 60% rise in refined equivalent production in the second quarter.
Chinese jewellery consumption has been soft this year, while indications of a slowdown in the global car industry, which uses the metal in catalytic converters, is also undermining sentiment towards platinum, analysts said.
"A major problem is that investors have lost faith in the long-term story and the reason is probably the diesel issue," Macquarie associate director Matthew Turner said.
"Although European car sales are rising, the diesel share is falling."
Data suggest overall demand in number-one consumer China has also been soft this year. Mitsubishi analyst Jonathan Butler said platinum turnover on the Shanghai Gold Exchange was down 21% in the first half.
"With jewellery buying suffering as a result of the equity market crash and economic slowdown, there is possibly more speculative activity than normal, helped by a rotation out of equities and into hard assets," he said in an interview with the Reuters Global Gold Forum this week.
"Overall, we are somewhat negative on jewellery fabrication demand this year, and cautious on industrial buying."
Platinum has not been below $1,000 since early 2009, after the collapse of Lehman Brothers and start of the global financial crisis sparked broad-based selling of hard assets and panic over the outlook for industrial metals demand.
This year it has been undermined by the fact that last year’s unprecedented five-month strike among platinum miners in SA — the source of three-quarters of global platinum supply — failed to lift prices, suggesting consumers were plentifully supplied.
Platinum’s historically unusual discount to gold has reached its highest since late 2012, at nearly $145/oz.
That has led investors to step back from the market. Gross short positions in NYMEX platinum positions sat at 93% of the record high last week, UBS said in a note, while platinum-backed exchange-traded funds (ETFs) have seen outflows this week.
Platinum ETFs, which issue securities backed by physical metal, saw huge inflows in 2013 and 2014 after the launch of a rand-denominated product in SA. While those funds have not been heavily sold, inflows have tailed off this year.