Gold’s surge of the past three weeks has left its fellow precious metals in the dust. The yellow metal has risen above platinum for only the second time in 14 years and is more expensive relative to silver than at any time since February.

Does that mean a reversion is on the cards, and either gold will fall or silver and platinum will rally hard?

The platinum/gold ratio has form. Since 1985, every time it has dropped below 1 it has witnessed a sharp reversal within weeks. Fundamentals support the historical trend. At current prices, platinum is close to the cost of production, suggesting further falls are unlikely. And its cheapness relative to gold should boost demand in the important Chinese jewellery market. Indeed, the ratio has moved in platinum’s favour since gold slipped last week.

But a broader reversal may not happen immediately. There are good reasons that gold has outperformed: it does not share other metals’ reliance on industrial demand, and so is a truer haven in times of market turmoil. Anyone betting on a reversal of the ratio is betting that global markets will calm down – and there are precious few signs of that.

Get alerts on Commodities when a new story is published

Copyright The Financial Times Limited 2019. All rights reserved.
Reuse this content (opens in new window)

Comments have not been enabled for this article.

Follow the topics in this article