Spread b/w Gold and Platinum may remain elevated: Barclays

UNITED STATES January 27 2014 4:50 PM

LONDON (Scrap Register): Barclays maintains the view that the spread between gold and platinum is likely to remain elevated, given the coordinated strike action across the platinum sector.

According to Barclays, the producers have welcomed the government’s efforts to mediate the situation while Impala Platinum closed operations ahead of the strike action. Prolonged outages are likely to buoy prices further, given that we believe the more placid industrial environment last year allowed producers to build stocks.

Price action has been mixed across the complex, with gold trading in a much wider range w/w, closing at levels last reached six weeks ago and levels last settled at in mid-November.

In turn, the gold-silver ratio has risen to early December highs and platinum’s premium over gold has fallen below $200, but remains elevated. Gold’s rally was supported by US Treasuries falling to early December lows, equity markets easing and the dollar weakening, as well as developments on the fundamental front.

Gold’s correlation with US Treasuries and the USD will be key drivers this year alongside macro data releases as they pertain to tapering. While market focus will shift to the FOMC meeting this week, much of the attention this week has centred on reports of India relaxing its trade restrictions.