Banks have raised their platinum price forecasts over the last quarter, a Reuters poll showed on Monday, as miners in major producer South Africa gear up for wage talks and the prospect of further monetary stimulus allays fears over slowing growth.
Poll respondents cut forecasts for its sister metal palladium next year, however, while price expectations for the current year are unchanged from three months ago.
A poll of 21 analysts and traders carried out in the last two weeks returned an average forecast for platinum this year of $1,000 an ounce, up from $945 in a similar poll in April.
In 2017 the metal, primarily used in autocatalyst manufacturing and in jewellery, is expected to rise to an average $1,100 an ounce
That suggests prices are bottoming out after three straight years of losses. So far this year platinum has averaged $967 an ounce, its weakest annual average since 2005.
"Rampant car demand - much at odds with an otherwise moribund economy - has clearly helped platinum," Sharps Pixley chief executive Ross Norman said. "Looking ahead we forecast a levelling off in vehicle demand, but that is not to say that prices will start declining."
"We expect another round of strikes in South Africa, which, if protracted, will limit supply and ensure the market remains well bid."
Wage talks between unions in South Africa, which are demanding as much as 50 percent pay increases, and the mining companies started last week.
Strike action there may tighten supply, though the ready availability of above-ground stocks of the metal cushioned prices during previous bouts of strikes.
While analysts had lifted their gold, silver and platinum forecasts for this year, their average palladium price forecast for 2016 was flat from April, at $580 an ounce, while their 2017 price view was 2 percent lower, at $668 an ounce
Palladium-backed exchange-traded funds have seen outflows for a second year this year, while the always-small palladium jewellery market has evaporated as Chinese buyers lost interest in the metal.
"Palladium will continue to languish as its supply is expected to rise faster than the growth in demand due to lower demand for jewellery and electronics," Sreedharan Unnithan of Philips Futures in Singapore said.
Nonetheless, the metal represents good value for some, analysts said, after lagging gains in other precious metals this year, and may represent a good buy for investors. Its predicted price for 2017 is 15 percent higher than this year's forecast.
"In the case of a good economic future with higher growth rates in 2017, palladium will outperform," LBBW analyst Thorsten Proettel said.
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