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The German
precious metals trading group Heraeus’s prediction that the platinum price would experience another setback was proven correct last week, as the white metal’s
price fell to $1,660 per ounce. According to Heraeus, several factors are responsible for modest price appreciation in the platinum sector.
The slowdowns
in the US and Chinese economies
are partly to blame. Platinum price analysts are also paying particular attention to
car markets around the
world. Platinum and palladium are both precious metals, but are perceived more
as industry metals among market participants, with both metals
are used in the production of catalyst
systems. Though since March there has been an increasing number of negative forecasts on platinum’s price development, some think that the negative medium-term outlook for the platinum sector has already been factored in at the markets.
Europe’s escalating
sovereign debt crisis is also
placing a lid on the platinum price as well. The Greek parliament’s vote last week
to authorise additional austerity measures eased investor fears somewhat. But many now expect
the spotlight to turn to
Ireland, since the government
in Dublin is likely to ask the European Union and the
International Monetary Fund
for a second bailout this
year, too. The Irish government had intended to return to the bond markets
in 2013 in order to
refinance the state without external
assistance again. The country’s
statistics bureau recently
published a report saying
that Ireland’s GDP grew by 1.3% in Q1, raising hopes at the markets that the country might be on the mend. However, others pointed out that these GDP calculations were masking the losses suffered by Ireland-based
multinational companies. GNP measures
– which take these losses into account – declined by 4.3% in Q1.
Ireland’s unemployment
rate is currently at a 17-year high, and as long
as the country’s economic
growth rate does not pick up significantly, new losses in the almost entirely nationalised banking sector will have to be expected. Experts already say that the 85-billion-euro bailout could turn out to be insufficient to sustainably
stabilise the Irish banking system. Recently released data have already hinted to a considerable slowdown in the
car sales – with the exception of Germany and
France – in most of the EU member states. Thus, Europe’s continuing debt problems were strongly weighing on the platinum price as well.
According to Heraeus,
capital investors have been acting very cautiously at the platinum market for some time. This development was well reflected by the fact that long-term investors are still sitting on the sidelines, and are unsure of whether or not to take long
positions in the metal. A growing
number of global capital investors
and industrial end users seemed to be pessimistic regarding the white
metal’s further price development, and both the physical demand for platinum bars as well as sector Exchange Traded Funds (ETFs) are under sales pressure at the moment. For now, platinum bulls will have to be patient.
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