Platinum Touched Its Six-and-a-Half-Year Low in 2015

In 2015, platinum’s price fell to its six-and-a-half-year low. The lowest trading price observed for platinum futures was $832.40 an ounce. This nadir was reached on December 2, 2015, prior to the Fed giving its verdict on the interest rate hike.

The strengthening US dollar suppressed most of the dollar-denominated assets, including commodities that include precious metals like platinum. The below graph shows a clear downward channel observed in platinum prices for 2015. So far in 2015, platinum has fallen 28.6%. After touching its high of $1,284 per ounce, it embarked on a southward journey.

Another important chapter in platinum’s price decline is the Volkswagen scandal, which came to light on September 18, 2015. As automobile catalysts comprise ~44% of the demand for platinum, the Volkswagen scandal curbed the demand for diesel-fueled cars that use platinum as a catalyst. This pulled down the already depressed platinum and comparatively strengthened palladium. The rise in the mine supply is another crucial factor that weighed down platinum prices.

The fall in platinum’s price is extended to ETFs that take their price from platinum, including the Physical Platinum Shares ETF (PPLT) and the DJ-UBS Platinum Trust Sub-Index ETF (PGM). These ETFs fell 27.3% and 30.9%, respectively, on a year-to-date basis.

AngloGold Ashanti (AU), Sibanye Gold Corp. (SBGL), and Gold Fields Inc. (GFI) fell 11%, 9.8%, and 32.9%. respectively, on a year-to-date basis. AU, SBGL, and GFI contribute 10.6% to the price changes in the VanEck Vectors Gold Miners ETF (GDX).