Platinum is forecast to end the year at $1,200/oz and palladium at $750/oz, largely on the back of strong gold prices but also supportive supply and demand fundamentals, according to a report by consultancy Metals Focus published Monday.
At current spot prices, it would mean further gains this year of 20-25% for both metals.
Platinum was trading around $1,050/oz Monday morning and palladium at just below $595/oz.
Both have already gained over 30% since their troughs in January, as "an increasingly favorable economic climate for precious metals, gold in particular, has been the key driver to help lift platinum and palladium," according to Philip Newman, director of Metals Focus.
The consultancy expects slow US interest rate increases, negative monetary policy and concerns about the outlook for global markets are expected to keep gold prices high this year. They have gained some 20% in so far this year to around $1,280/oz Monday morning.
In addition, platinum and palladium are both expected to record physical deficits in 2016.
"Even though Metals Focus believes that a prolonged labor dispute in South Africa will be avoided, wage negotiations and potential disruptions should provide some fresh boost to PGM prices later this year," the report said.
Meanwhile increases in vehicle production, including a pick-up in growth in China, should help with demand for auto catalyst production.
Platinum's physical deficit shrank to 3.79 mt in 2015, according to Metals Focus, as a recovery in mine production lifted total supply by 17%, versus 9% growth in demand.
Palladium recorded a small increase in its physical deficit to 20.5 mt, as supply and demand both rose by around 1% in 2015.
However, with plenty of above-ground stocks in both platinum and palladium, the consultancy does not see a strong rally in the near to medium term.
"Even at their peak in the latter part of this year, our projections see prices for both metals falling short of their 2014 highs," Newman said.
In 2014, platinum traded over $1,500/oz and palladium over $900/oz.
