Platinum-related exchange traded funds glimmered Wednesday as the precious metal rose to a 6-year high on economic recovery hopes that bolstered bets of industrial autocatalyst demand, along with expectations for additional stimulus and a weaker dollar that would support demand for hard assets.
Among the best performing ETFs of late Wednesday afternoon, the Aberdeen Standard Platinum Shares ETF (NYSEArca: PPLT) increased 4.7% and the GraniteShares Platinum Trust (PLTM) added 5.2%. The platinum spot price was 4.9% higher to hit $1,238.6 per ounce.
“Platinum’s fundamentals are attractive with the metal being in a deficit for some years,” Ross Norman, an independent analyst, told Reuters, forecasting the industrial metal to average $1,316 an ounce this year.
Norman highlighted potential supply issues in South Africa, which faces a chronic shortage of electricity that has disrupted normal mining conditions need to produce the metal.
On the demand side, analysts have pointed to last month’s 30% year-on-year surge in auto sales in China, the world’s biggest auto market. The rising demand for automobiles also supported demand for platinum in automobile catalytic converters that are designed to limit greenhouse gases from exhaust fumes.
“Platinum has come onto investors radar,” Norman told MarketWatch. “It is heading for the third consecutive year of supply deficit, while with demand is strong from China whose car sales are up 30% year on year at 2.5 million units, the 10th consecutive month of gains.”
Meanwhile, many have turned to precious metals like platinum aa a store of wealth in anticipation of rising inflationary pressures due to aggressive monetary and fiscal policies.
“Inflation fears are emerging, especially in the U.S with the stimulus intended to pass…(Fears are) that this would be too much and spark inflation going forward,” Quantitative Commodity Research analyst Peter Fertig told Reuters.
The U.S. Congress is expected to pass President Joe Biden’s $1.9 trillion coronavirus relief bill even without Republican support. Democrats and Republicans are split in the Senate, but Vice President Kamala Harris holds the tie-breaking vote.
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