Gold turns dearer than even platinum

Gold is set to widen its premium over platinum in trade after hitting parity for the first time in two-and-a-half-years this week, with no end yet in sight to the potent cocktail of fear factors that are benefiting safe havens at the expense of cyclical assets.

Gold prices rose above those of platinum for the first time since December 2008 late on Monday.

The last time this happened, the situation reversed within a few days, and traders said then that the convergence of the gold-platinum ratio gave a clear signal to sell gold and buy platinum.

Today's backdrop is very different.

"Gold as a defensive asset is being driven higher at the moment by risk aversion, and platinum as a cyclical asset is under pressure because growth is slowing," said Michael Widmer, an analyst at Bank of America-Merrill Lynch.

"We were there around the great recession (2008), and then you had the various stimulus packages hitting the market, and you saw the prices of the two metals starting to diverge again," he said. "The macro picture is a bit different this time around. I don't think that it is a compelling trade."

Text: Jan Harvey, Reuters

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