In middle-term I think that platinum prices will be muted: limited supply growth (mainly due to PGM Capex rationalization in South Africa) will be offset by demand decreasing as platinum has been loosing its market share in autocatalysts to palladium. However, in long-term I see some upside potential: (1) sustainable automotive production growth globally, (2) Growth of SUV market share and increase in engine size, (3) Strengthening emissions legislation worldwide
I believe that platinum will recover its position against palladium and gold. Given the tightness in the palladium market and upside price risk, I expect auto manufacturers to look at using more platinum in petrol autocatalysts. Once platinum prices are seen to have turned a corner, we would expect bargain hunting in jewelry to take advantage of platinum's discount to gold.
Platinum prices in recent time suffered from decreasing of diesel cars sale, and I do not see this trend changing. Moreover I expect that gold price drop (due to US economy recovery) will be additional pressure on platinum.
Now we see that Platinum is trading just half its level in 2010 and I don't expect any upside factors for the prices. The main reason of this reduction is fact that diesel in Europe continues to lose market share. Another factor is decline in demand from jewellery in China, which is the dominant market for platinum jewellery. Consumers continue to express a preference for gem-set, branded jewellery sold by piece, the opposite of most platinum product that is available. So I'm bearish on platinum prices.