Gold is set to widen its premium over platinum after hitting parity for the first time in 2-1/2 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."
In contrast to the situation in 2008, gold's premium to platinum is a function of its own strength, rather than a falling platinum price.
Gold hit a record $1,778.29 an ounce this week as concerns over economic stability and debt crises in the euro zone and United States sparked heavy buying among investors.
Platinum prices have eased by just over 2 percent this year, although they have not dropped in the same way as some industrial metals such as copper, which is down 8.2 percent in electronic trading, or zinc down 13.2 percent.
Although platinum is nominally a precious metal, the bulk of its demand comes from the industrial sector, particularly carmakers who use it to make catalytic converters. This makes it more sensitive to threats to growth.
This may mean it still has some way to fall, potentially further widening its discount to gold, analysts said.
In 2008, platinum plummeted from record highs to fall below the price of gold, said Deutsche Bank analyst Michael Lewis.
"Now ... this parity has occurred and we haven't priced in that recession risk yet," he said. "There is more risk that if we get negative data, it could sustain that discount of platinum for a longer period of time."
A short-term reversal in the ratio is possible. The current rush for safety sparked by Standard & Poor's decision to downgrade the U.S. credit rating on Friday has sparked a 6.3 percent rally in gold prices in the past two days alone, their biggest two-day rise since 2008.
That kind of jump has typically been followed by a correction, as was seen in late April after gold's initial break above $1,500 an ounce.
At the same time, there are some factors that could suggest a short-term rise in platinum prices as the threat of strike action among miners in South Africa, the source of four out of five ounces of the world's platinum supply, continues to loom.
But any possible reversal in the fortunes of gold and platinum are likely to be brief, with the wider economic picture still overwhelmingly pointing to continued appetite for so-called havens at the expense of assets seen as higher risk.
"If you look at the platinum group metals and other industrial metals as well as oil, it is all a one-way street -- down," said Afshin Nabavi, head of trading at MKS Finance. "Gold and the Swiss franc are really the only safe havens."
In the longer term, gold prices will undoubtedly correct at some point, with a rise in U.S. interest rates expected to be the turning point in the yellow metal's decade-long rally.
Meanwhile, platinum's underlying supply fundamentals still point to higher prices as South Africa's mining sector faces stronger cost pressures from an increased focus on safety, rising inflation and higher wage demands.
This should give long-term support to the metal. But in the current environment, few are looking that far out.
"On a historical basis, the ratio looks cheap, but that is not necessarily reason to buy," UBS analyst Edel Tully said in a research note.
"If we were prepared to buy the ratio now and hold it for a year or two, it would probably be a good trade, given that platinum's fundamentals signal a lot more tightness over the medium term. But as investors struggle to make money in the short term, positioning for the medium term is in short supply."
(Reporting by Jan Harvey)