It has happened in the past, not often though; but now, platinum prices have gained parity with gold. On March 13, in London, platinum closed above gold. While gold PM Fix was $1,690 an ounce (down from the previous day's $1,698/oz), platinum PM Fix was at $1,691/oz (up from the previous day's $1,687/oz).

Although several demand-supply estimates have been floating around the market for the metal, it was expected that supplies would tighten this year especially given the prolonged labour action at the second-largest producer (Impala Platinum) this year that resulted in loss of production.

For the present, two factors have prompted the metal's price movement. One, the platinum market has run into deficit in the early part of the year itself much against expectation; and two, the reduced prospect of further quantitative easing (QE) in the US has proved negative for gold.

For 2012, mine supply is forecast just a tad higher than 6.0 million ounces while demand is forecast at a shade less than 6.2 million ounces. Moreover, investor interest in the metal, which had waned in the last quarter of 2011, has been rising of late with robust ETF inflows in the first two months of the year.

It is estimated that as much as 115,000 ounces of the metal flowed into ETFs so far, a substantial increase from 77,000 ounces recorded the whole of last year. Speculative interest in platinum continues to remain high.

Supply decline forecast

Latest forecasts suggest a 5 per cent decline in supplies in 2012. On the other hand, demand is expected to stay healthy. For instance, Chinese demand last year was at a new high of 2.55 million ounces, exceeding the record of 2.44 million ounces in 2010. According to analysts, platinum imports have remained robust overall as lower prices supported appetite; but European demand has been weak because of economic woes.

With gold prices coming under downward pressure because of various factors including a firm dollar and platinum being driven higher by market fundamentals and investor interest, the two metals will continue to compete for attention.

Importantly, platinum has industrial applications. It is increasingly being used in auto-catalyst as well as in chemical and glass industries. This is of course in addition to physical demand for jewellery making as well as investment demand.

Source: http://www.thehindubusinessline.com/markets/commodities/article2999408.ece?homepage=true&ref=wl_home