Risk for Precious Metals Prices on the Downside
Source: Reuters, Risa Maeda and Ed Lane (6/7/10)
Prices are on the downside as euro zone debt woes weigh on demand prospects.
Of the two precious metals, palladium has more promising fundamentals as demand is concentrated outside of Europe and investor buying is expected on dips, GFMS senior consultant Peter Ryan said in a Tokyo briefing about forecasts issued in April.
"I think $400 (an ounce) will be well supported by investors," Ryan said, referring to palladium prices. "I would say the risk at the present time is more to the downside," Ryan said, referring to platinum prices.
On Monday, spot platinum stood at $1,491, down 15 percent from around $1,750 in late April.
Platinum prices are sensitive to the diesel automobile market where Europe is dominant. In contrast, palladium prices are more linked to gasoline-powered vehicles and often benefit from a shift from more costly platinum, Ryan said.
Separately, GMFS said imports of more than 11 tons of platinum by China in March, a sharp jump from 6.4 tons in February, was likely speculative buying, adding there was little chance it was all for either jewelry or auto catalyst use.
GFMS CEO Paul Walker said in the same briefing that investors will remain the principal driver of gold prices this year, adding that without their interest current levels around $1,200 per ounce would be difficult to maintain.