The platinum price temporarily surpassed the gold price for the first time in 10 months on Amplats’ platinum operations review.
Amplats announced a 400koz estimated reduction in production last week deriving from mine closures in an attempt to contain its rising costs. The potential loss in production is equivalent to 7% of total mine supply in 2012 and is expected to tighten result in further tightness in the platinum market. Supply side issues in South Africa are likely to remain the main platinum price driver in 2013.
Labor disruptions and production rationalization are likely to continue to tighten the supply-demand balance, as more companies follow Amplats’ example. With nearly 80% of the world’s supply of platinum mined in South Africa, supply disruptions and political hurdles in the country can significantly impact the price. [Platinum ETFs Rise Amid Coin Furor]
Thomson Reuters GFMS remains bullish gold in 2013, forecasting gold to average an all-time high over the first half of the year. The consultancy company published its latest Gold Survey 2012 update last week, with predictions for the first half of 2013. Despite the sell-off in the last quarter of 2012, Thomson Reuters GFMS expects that extremely accommodative monetary stance from the US Fed and other major central banks and continued sovereign debt concerns will remain in place and will return to the fore this year. While the market appears concerned the Fed may prematurely end its QE program in 2013, other central banks are flooding financial markets with cheap liquidity including the ECB, the Bank of Japan, and potentially more from the Bank of England with a new governor in 2013.
Gold hits one-month high as US policymakers continue debt ceiling negotiations alongside expectations of additional monetary stimulus. The gold price ended last week up 2% as US politicians continued discussions on the extension of the debt limit. Meanwhile, the Bank of Japan is widely expected to continue the global central bank flood of liquidity this week, generating further apprehension amongst investors over fiat currency debasement. Central bank policy is also expected to be supportive for gold in 2013 as foreign reserve diversification will likely remain a stable source of demand for gold in 2013.