While the fundamentals look good, we shouldn't forget about speculative positioning. As flagged in this post, platinum looked like a relatively good bet heading into the taper decision by the Fed, which is not good news for gold but is not as important for PGMs. Since then the platinum/gold ratio has risen by ~6% and platinum has outperformed palladium.
A lot of this has been driven by short covering, with the chart on the left showing a big pullback in speculative shorts, while long positions are fairly stable. It seems that further gains in platinum prices will have to be driven by new longs from these levels.
The need for fresh longs to push prices higher has been the story of palladium for sometime. Palladium prices have held up incredibly well, but have failed to really break out to the upside despite a strong fundamental outlook. This is partly because investors are all tilted in the same direction.
Gold prices have also been a little stronger lately, with speculation around a potential announcement by the PBC that they have bought more gold one reason put out there for its rise. Im not sure why this is bullish, as it has already happened and prices were falling sharply when they did buy, so is it really that important?
Probably more important is the recent rally in bonds, with 10-year TIPs rallying a large 20bps since the start of the year, despite the broad consensus that tapering will continue at a steady pace.
Speculative shorts have not changed so much since tapering was announced, suggesting not much has changed in the eyes of those investors when it comes to the prospects for gold. I tend to think they are right, with the pressure on gold prices to fall regardless of what the PBC are doing with purchases.
