Platinum surges to 6-year high on hopes of industry bounceback

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Platinum rallied above $1 200 an ounce to a six-year high on bets that a recovery in industry and stricter emissions rules will tighten supply.

The white metal is used primarily in pollutant-cutting catalytic converters in cars, where it competes with palladium. The huge price disparity between the two, as well as the higher loadings demanded by tighter regulations on emissions, has raised expectations that platinum will see greater use.

“Optimism on the outlook for industrial and car demand, more stringent emission regulations and, in the last couple of days, some weakness in the dollar” have driven platinum higher, said Georgette Boele, senior precious metals strategist at ABN Amro Bank NV.

“Longer-term there is much more potential” for the price to rise, she said.

Autocatalyst maker Johnson Matthey said Wednesday that it expects platinum’s share of catalyst demand to increase this year after a 15-year decline. The gain will mostly be driven by higher demand from heavy-duty Chinese vehicles, though a recovery in car production generally will boost demand for all platinum-group metals, it said.

Platinum has outperformed its peers this year after spending most of 2020 lagging behind. The metal’s price outlook was improved significantly by disruption at a key South African refinery, which likely will keep the market in deficit this year, according to the World Platinum Investment Council. Strong investment demand from those expecting a catch-up to gold and palladium also has proved supportive.

Platinum gained as much as 6.1% to reach $1 252.84 an ounce.

Gold advanced for a fourth day. Investors will be focused on the U.S. stimulus package as President Joe Biden shrugged off warnings that the economy may overheat as a result of boosted spending. Still, Biden backed a proposal for quicker phase-outs of planned $1 400 stimulus checks, reducing the overall handout.

A key measure of prices paid by US consumers was unchanged in January for a second straight month, data showed on Wednesday, underscoring the pandemic’s lingering restraint on inflation.

Federal Reserve Chair Jerome Powell will later speak on a webinar hosted by the Economic Club of New York.

Spot gold added 0.8%, while palladium rose 1.9% and silver was up 0.7%. The Bloomberg Dollar Spot Index slipped 0.1%.

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