The platinum price rose in February, moving in tandem with the gold bullion as investors fled to safe haven assets on the back of growing political instability, but nevertheless gained further support from a rebound in the European economy.

The European economy expanded by 0.4% in 4Q16, driven by a healthy rise in investment and consumer spending. Inflation showed signs of an improvement growing 1.8% in February, in line with expectations but core inflation remained unchanged. New vehicle sales jumped 10.2% in January with strong sales from VW (+10%), Fiat Chrysler Automobile (+15%), Ford (+9.5%). Spain, France, Italy and Germany all posted double-digit growth, and even the British passenger car market grew by another 2.9% despite Brexit-related uncertainties.

Although the economic outlook has improved, the European Central Bank (ECB) is expected to resist calls to tighten policy, pointing to political risks, weak underlying price growth and a still fragile recovery nearly a decade after the bloc’s economic woes began. Market participants remain cautious ahead of high-risk elections in Netherlands and France during an upsurge in populist and anti-establishment sentiment.

Although we expect the deficit in 2017 to narrow, platinum fundamentals still remain price supportive. We must caution, however, that sentiment and global growth will be a key price influencer going forward.