LONDON: Gold prices traded at a $100 premium to platinum on Wednesday after hitting parity with the white metal for the first time in 2-1/2 years last month, as concerns over the economic outlook hurt industrial precious metals while lifting bullion. At 0934 GMT, spot gold was bid at $1,655.70 an ounce, while platinum was at $1,555.50 an ounce. The gold:platinum ratio, or the number of platinum ounces needed to buy an ounce of gold, reached 1.06, its highest since 1991. Due to the lower price of both metals, platinum's discount to gold stood at less than $25 an ounce at that time, however. Its current premium is the highest recorded in absolute terms since Reuters data was first compiled. The gold:platinum ratio dropped back below 1 in August as traders took parity between the metals as a signal to sell gold and buy platinum. However, gold's greater appeal as a hedge against instability in the wider financial market and platinum's exposure to the lacklustre car sector has since caused the spread between the metals to widen. "Overall the situation for the industrial side of the precious metals complex remains more fragile than for gold," said Peter Fertig, a consultant at Quantitative Commodity Research. "Even if you are at a new high in the spread, it does not mean the absolute limit." "Nothing is indicating that there should be a relatively fixed price relationship between gold and platinum, and that prices for the spreads have to remain rangebound. Therefore there is still upside potential."

Source