HSBC skittish on silver, eyes platinum

Analysts from British global bank HSBC said on a note Monday silver prices are unlikely to move higher without upward momentum from gold. Instead, investors should look to platinum as having the most potential for returns.

The analysis shows that a platinum rally would not rely on gold's performance and notes the decreased level the often-overlooked metal is trading at.

After surpassing $2,200 an ounce in 2008, the metal fell sharply during the financial crisis and has shown bearish patterns ever since. After reaching an all-time low of less than $600 an ounce during the pandemic outbreak, it now trades at around $940 an ounce.

HSBC analysts noted that platinum should be considered fundamentally undervalued if it falls below $900 an ounce.

Biggest deficit ever

A recent report from Bloomberg shows that platinum is set for a record deficit as the prices still resist recovery.

Daniel Ghali, senior commodity strategist at TD Securities, said last week that platinum prices may have bottomed.

“We think that we could be in the process of forming a local low,” he said, adding that algorithmic trading has caused many recent fluctuations in price.

Ghali noted the use of platinum in catalytic converters and said platinum’s price is still tied heavily to the automobile industry.

However, he noted an increase in demand, specifically in China, for the precious metal’s use in jewelry.