Platinum, palladium prices forecast to rise

Confidence in platinum prices has strengthened since the start of the year after its strong first quarter, and palladium is seen as a still better bet as cautious hopes for a recovery in demand gain traction, a Reuters poll showed on Friday. The survey of 24 analysts returned an average 2012 platinum price forecast of $1,682 an ounce, up from a price view of $1,610 an ounce returned in a similar poll in January.
The new forecast suggests a 5 percent rise in the average spot platinum price from the current average at $1,604 an ounce for the year so far. Respondents to the poll expect a firmer industrial demand picture for the autocatalyst metal, though buying is expected to remain muted by historic standards, and investment demand may be driven up by a rising gold price. "Platinum remains in a long-term surplus with substantial above-ground inventory," Societe Generale analyst Robin Bhar said. "Despite this, the price is expected to improve through to early 2013 as the market anticipates a recovery in the European economy and continues to keep a close watch on Southern African production issues."
Prices will strengthen throughout the year, the respondents forecast, averaging $1,650 an ounce in the second quarter, $1,700 in the third quarter and $1,750 an ounce in the final three months of the year. They are expected to post another year of gains in 2013 to average $1,804 an ounce, the poll indicated.
Platinum was one of the worst-performing precious metals last year, falling 21 percent as car sales dropped in Europe, which led to a market surplus estimated by Johnson Matthey at 195,000 ounces. As the environment for gold as an investment vehicle improved and the outlook for industrial commodities waned, platinum slipped into a historically unusual discount to gold, which has persisted for much of the past seven months.
A shift in the economic picture to a growth scenario is likely to tip this discount back into a premium, analysts said. "In the second quarter, platinum group metals are poised to benefit from a 'durable' growth story more than traditional safe havens like gold," UBS analyst Edel Tully said in a note.