Platinum: Key Trends in the Year Ahead

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Platinum is expected to remain in a "substantial" deficit over the year as a whole, suggesting a strong price performance throughout. The financial background and banking tensions are expected to contribute to extraordinary volatility in the platinum price and a trading range of $1,775 to $2,500 during the next six months.

In its latest annual review of the platinum group metals markets, "Platinum 2008", Johnson Matthey identifies a series of key trends that will inform the outlook for the metals for the rest of this year.

Platinum is expected to remain in a "substantial" deficit over the year as a whole, suggesting a strong price performance throughout. The financial background and banking tensions are expected to contribute to extraordinary volatility in the platinum price and upside risks remain, notably from the supply side, which leads the group to look for a trading range of $1,775 to $2,500 during the next six months.

With platinum trading in late May at $2,165, this implies scope for a spike to a high some 15% over existing prices. While this might seem like an awfully wide range it should be seen as reflecting the expectation for "extraordinary volatility". Platinum has spiked before and is fully capable of doing so again. The downside is the prospect for fresh liquidation in the commodities sector if necessary in the face of any sustained fall in the equities markets.

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