After the rout, platinum and palladium face more turmoil before recovery – by Peter Hobson and Sumita Layek (Reuters U.K. – March 18, 2020)

LONDON (Reuters) – Platinum and palladium will remain turbulent in coming months after huge losses sparked by the spread of coronavirus, before starting a tentative recovery with support from palladium’s supply gap and platinum’s correlation with gold, analysts said.

Platinum has plunged 40% and palladium 45% from February highs as efforts to contain coronavirus stifled the global economy and turmoil in wider markets forced investors to sell precious metals for emergency cash. [MKTS/GLOB]

On Monday, platinum suffered its biggest one-day fall on record and touched $558 an ounce – the lowest since 2002 – while palladium tumbled from a record high of $2,875.50 to some $1,500 an ounce.

“Liquidity was simply not there to cope with the amount of selling pressure,” said Saxo Bank analyst Ole Hansen. “That was probably the technical reason (for the price falls). The fundamental reason is related to the economic outlook, which is obviously looking pretty grim,” he said.

Around 80% of palladium and 40% of platinum is used in vehicle exhausts to remove harmful emissions. Platinum is also widely used in jewellery. Auto sales could fall 10% this year, analysts at Citi said, reducing palladium consumption by nearly 600,000 ounces – around 6% of global annual demand – and platinum use by close to 300,000 ounces – 4% of annual demand.

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