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Capital Markets

Commodities: Platinum and palladium outshine gold?

Prices outstrip gold this year; China’s industrial demand underpins rises

Gold isn’t about to lose its status as a safe haven in times of financial uncertainty; the European sovereign debt crisis will ensure that. But, as far as the commodity markets are concerned, platinum and palladium are the metals of choice in 2010 and beyond, as a rebound in economic growth, especially in the emerging markets, sets in motion a sustained rally. After gaining more than 23% in 2009, the gold price has risen by a pedestrian 1% in 2010. Meanwhile platinum and palladium have emerged as two of the best-performing markets, with platinum up 18.7%, and palladium up 38.2%. Robin Bahr, a metals analyst at Crédit Agricole in London, thinks that despite their outperformance already, the two metals will continue to offer better value than gold. There are two key trends at play here, one economic, one fashion, which could realign pricing across the precious metals markets.

Leading indicators

According to the OECD’s leading indicators for industrial production, there has been a big rise in expectations for a strong rebound in global industrial production. Crédit Agricole’s own macroeconomic projections forecast that real GDP growth in the emerging markets will outstrip that of the developed world by a ratio of two-and-a-half times to one.

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