FxWirePro: Platinum price forecasts to move in sync with gold in 2018 – Reshuffle hedging portfolio

The global platinum market deficit will rise sharply in 2018 – as per the industry report.

A conducive macro environment in 1H’18 begins additional upside in palladium among PGM bloc in our opinion, however, platinum will likely rally back in 2H’18 on the back of constructive precious metals price drivers. 

In line with unchanged forecasts for gold, we have not made any changes to our platinum price forecasts in 2018 as we continue to believe it will largely trade in sync with gold throughout next year. 

Similar to gold and silver, 2H’18 is where we see the greatest upside for platinum prices given that we believe the climate for precious metals allocations will improve as US real interest rates potentially remain constrained.

As such, we see platinum prices increasing QoQ by nearly 6% in 3Q’18 to average $985/oz before increasing further to average $1,015/oz in the final quarter of 2018.

Overall these forecasts imply a 1.35:1 gold-to-platinum ratio averaged throughout 2018, in line with the ratio's average over the last six months.

The global platinum market deficit will rise sharply next year thanks to resurgent demand from the jewelry and industrial sectors and declining production, an industry report said on Tuesday.

Trade tips:

Went short Jan’18 NYMEX platinum at a price of $978.90/oz in mid-September. Squared off half position and booked profit at 924.10/oz for a gain of 3.0%. Uphold the rest of the trade volumes for a trade target is $880/oz with a stop for the remaining 0.5 units at $950/oz.

In order to reshuffle the hedging portfolio, we advocate initiating longs for Dec’18 NYMEX platinum contracts.