Platinum to outperform other precious metals – ABN Amro

Precious metal prices rose strongly in 2020  and strategists at ABN Amro also expect higher prices in 2021. Silver is set to modestly outperform gold again while the stars are aligned for platinum. 

Key quotes

“The stars are aligned for gold prices but some cracks are appearing. We still expect prices to rise in 2021 on lower US real yields and a weaker dollar. The caveat is that long gold is still a crowded trade. For the same reasons we also expect silver prices to rise. We are positive on silver as long as silver prices are above the 200-day moving average (now at 21.8), and wait for price weakness to position for higher silver prices.”

“We think that platinum prices have the largest upside potential this year. First, a positive outlook for gold prices also supports the outlook for platinum. Moreover, some investors buy platinum as an investment alternative to gold if gold prices become expensive. Second, we expect an ongoing recovery in the industrial sector that will probably result in higher industrial demand for platinum. Third, we expect higher consumer demand for cars this year. Fourth, fuel cell technology for cars will continue to get more attention. Platinum is used in hydrogen cars and the content needed exceeds what is needed in regular diesel car converters. Last but not least, platinum is the cheapest precious metal. In short, we are positive on platinum as we expect demand to outpace supply.”

“We expect higher palladium prices in 2021 but the rise will probably be modest. There is still a supply shortage because of higher palladium demand for car converters to meet the more stringent emission standards in China and Europe in the future. We also expect higher industrial demand because of the ongoing recovery in the global industrial sector. The positive trend in gold and the other precious metals will probably spill-over to palladium as well. But it is unlikely that palladium will be used a lot in jewellery or as an investment vehicle. So palladium is mainly a cyclical play, but the market is very thin.”