Current market trends
Investor demand for gold during the pandemic has grown since the general collapse of asset prices in mid-March, with gold exchange traded fund holdings up by US$49 billion or 20 per cent. Interestingly, since the platinum and gold price lows of 19 March 2020, at $599/oz and $1,474/oz respectively, platinum has significantly outperformed gold, rising 58 per cent versus gold’s rise of 32 per cent. Importantly, for the first time in years, sentiment towards platinum is turning positive.
Platinum’s price outperformance when compared to gold is no anomaly. In the two years subsequent to the price lows of the Global Financial Crisis (GFC) in late 2008, platinum's weekly returns outperformed those of gold by between 30 per cent and 65 per cent.
After the GFC, platinum’s price performance was not solely due to growing investment demand; exceptionally strong platinum jewellery demand and limited supply growth maintained positive investor sentiment despite very weak automotive demand.
In 2020, platinum market fundamentals have improved appreciably, with strong Chinese platinum imports, strong platinum bar and coin demand, growing recognition of platinum substitution for palladium in autocatalysts, as well as supply losses. The situation in 2020 has many similarities with the GFC and many gold investors may well now view platinum as more precious.