Bullion Ballet: Trading the Gold Platinum Ratio

Gold is the favoured precious metal. Its demand reflects consumer consumption of jewellery, investment demand, and monetary policy conditions. In a previous paper, Mint Finance highlighted these factors in detail.

Platinum is also a precious metal, used to create jewellery and to a small extent as a form of investment. Crucially, unlike gold (6% industrial demand), platinum (73% industrial demand) is used more extensively for industrial applications.

As gold and platinum share the source of jewellery demand, their performance is generally positively correlated.

However, due to the distinct sources of demand as well as the extent to which each precious metal is used for each application, the correlation can break. These periods can offer tactical trading opportunities to benefit from the relative performance of CME Group’s precious metals suite. Particularly in a key ratio called the Gold to Platinum Ratio (“GPR”) which measures the price of gold relative to platinum.


The GPR is affected by monetary policy. Though the ratio does not show a distinct impact upon the first-rate cuts by Fed, rapid rate cuts in response to economic crises such as recessions can cause it to rally.

The GPR increases during recessions due to investor preference for gold during times of crisis.

Interestingly, the ratio has been rising since 2008 as gold price reaches new record highs, while platinum currently faces a cyclical downturn.


While the GPR faces the potential to increase during a potential recession, there are signs that a recession may be unlikely in the US. US spending remains resilient and has contributed to faster than expected GDP growth in 2023. While growth slowed heading into Q4 2023, it is still expected to expand at a strong 2% in the quarter.

Moreover, the January BLS nonfarm payrolls report showed a massive 353k new jobs added. Wage growth was strong at 0.6% MoM, double the analyst estimate. Strong labour market and consumer spending in the US point to a healthier than expected economy.


In 2023, 33% of platinum’s demand came from industrial sources according to data from the World Platinum Investment Council. Platinum is used as a catalyst for several crucial industrial chemical processes. In addition, automotive demand represents a further 40% of total platinum demand.

In the automotive industry, platinum is used in catalytic converters to reduce emissions. This has been a recent driver of platinum demand due to rising emissions standards and the so-called platinum-for-palladium substitution.

In short, palladium is a Platinum Group Metal (PGM) which can be used interchangeably in automotive applications. The surge in palladium prices prompted many automakers to replace it with platinum. These changes will be in place for the lifetime of a car’s production so this trend will benefit platinum for an extended period.

While platinum is a standout among the so-called Platinum Group Metals (PGM), the industry has been facing a downturn over the past 2 years with prices sharply lower. Ample above-ground inventories as well as low investment demand has hampered platinum performance.

This downturn may not be permanent. Higher automotive demand and growth in hydrogen vehicles are expected to be long-term growth drivers for platinum.

For 2024, the World Platinum Investment Council forecasts a smaller supply deficit than 2023. This is largely due to lower industrial and investment demand as well as improved supply.

Anglo American, one of the largest producers of refined platinum stated that it expects PGM production to improve, which means ample supply.

During 2023, production was hampered in South Africa. Going forward, PGM’s are meant to be a major driver for the mining giant, so efforts to improve production are under way and management also expects prices to recover. However, continued cost pressures may force miners to scale back production.

Overall, the slowdown in chemical and petroleum demand as well as ample supply will limit Platinum’s performance in 2024, though price does face upside potential in the medium-to-long term.


Platinum faces a mixed outlook in 2024, while there are several long-term demand growth drivers pushing price up, it faces uncertain but bearish production and demand outlooks for 2024.

Similarly, gold is benefiting from heightened geo-political risk and strong central bank demand but faces resistance as prices reaches new record highs and a recession looks unlikely. Mint Finance covered some of these factors in detail in a previous post.

While the outlook for both precious metals alone is uncertain, a trade on the back of the GPR favours gold.

Not only has the ratio been on an uptrend for the past decade, it has outperformed both gold and platinum prices.

Moreover, the ratio is not prone to overly large corrections. The largest drawdown in the ratio was smaller than the largest drawdown in gold and platinum prices.


To express a position on GPR, investors can opt to use CME Group’s suite of precious metals future. Margin offset of 50% is available for a trade consisting of 1 gold (GC) contract and 2 platinum (PL) contracts. Executing a trade on the May futures contracts (GCK2024 and PLK2024), requires margin of:

(Margin for Gold Leg + 2 x Margin for Platinum Leg) = (USD 8,300 + 2 x USD 2,800) = USD 13,900 – margin offset of 50% = USD 6,950.

CME options on gold and platinum point to a bullish outlook for both but gold positioning is more bullish than platinum. As of 5/Feb, Gold options have a put/call ratio of 0.48 while platinum options have a put/call ratio of 0.75.

Consider the following hypothetical trade setup:

Entry: 2.275
Target: 2.530
Stop Loss: 2.100
Profit at Target: USD 23,013
Loss at Stop: USD 15,803
Reward to Risk: 1.46x

This position benefits when:
• Gold price rises faster than platinum.
• Gold price falls slower than platinum.

The position loses when:
• Gold price rises slower than platinum.
• Gold price falls faster than platinum.


CME Real-time Market Data helps identify trading set-ups and express market views better. If you have futures in your trading portfolio, you can check out on CME Group data plans available that suit your trading needs


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