HYDERABAD, India (Reuters) – Prices of platinum could rise in 2013 as markets digest limited supply from major producer South Africa, analysts said at an industry conference on Saturday, with platinum trading at a premium over gold.
South Africa accounts for 80 percent of platinum supply and its producers have seen output fall sharply over the last year because of industrial action and a flurry of government-imposed safety stoppages, sending prices to their highest level in more than three months.
Major producers may start shutting down mines on high labour and energy costs, Jeremy East, global head of metals trading with Standard Chartered Bank, said on the sidelines of the India International Gold Convention.
“Fundamentally we are bullish on platinum as we feel South African mines will have to start closing production… so supply will be reduced and market will be more balanced,” East said.
Gold prices could climb to $1,750 an ounce, up 5 percent from current levels, by December on euro zone concerns and expected stimulus plans, East said.
PREMIUM TO GOLD
Platinum will trade at a premium of $200 an ounce in six months due to a sharp surge compared to gold backed by supply concerns, said Jeffrey Rhodes, global head of precious metals of INTL Commodities.
“Over the last three months, we have seen platinum at a steep discount to gold of more than $200 below gold and it makes no sense especially to a metal which is vulnerable to supply shocks,” Rhodes said on the sidelines of the convention.
Platinum is currently at a discount of $144 an ounce to gold, and prices of the white metal may climb to $2,000 by end of December, Rhodes said.
“The real potential is to trade platinum versus gold. I don’t see any justification whatsoever for platinum price being below gold price.”
(Editing by Ron Popeski)
