Gold's premium over platinum reached its highest in 7-1/2 months on Wednesday at over $210 an ounce, and could rise still further as the white metal suffers from its heavy exposure to the beleaguered European car market.
Platinum, which is chiefly used in autocatalysts and relies heavily on the European car market, fell to its lowest price this year on Tuesday at $1,374.80 an ounce, as it failed to benefit from the investment flows that have boosted gold.
Some traders have in the past taken platinum's widening discount to gold, historically a cheaper metal, as a sign that gold is overvalued and platinum undervalued, suggesting they should sell gold and buy platinum. But in the near term platinum's vulnerability means that strategy is risky.
"The spread question to me comes down to more of a matter of technicals and positioning than anything fundamentals," Credit Suisse analyst Tom Kendall said. "The last time the spread widened out above $200, you have tended to have it come in subsequently."
"But from the platinum side, there is nothing, certainly on the demand front that you could point to to say, I want to be long platinum here.". . .View Full Article