“Consumers have begun to see platinum as a bargain since gold reached parity with platinum,” Johnson Matthey said in its preliminary report for 2011. Even so, gold's use in jewelry still dwarfs that of platinum by a multiple of about 25. The gulf between consumption levels in rings, necklaces and bracelets signals the potential for platinum's growth.

Demand for gold from jewelers fell to 1,962.9 tons, or 63 million troy ounces, dragged lower by a 13 percent slump in the second half, the Council said. Jewelry accounted for 47 percent of gold purchases last year.

Platinum's use in jewelry rose to 76.7 tons, or 2.5 million ounces, according to Johnson Matthey.

Morgan Stanley in January forecast demand for platinum to rise, reversing its outlook for the metal in January from a report in April 2011. The bank expects jewelers' consumption of platinum to climb 8.9 percent this year and by as much as 36.7 percent from last year through 2017, compared with its earlier estimate of a 21.7 percent slump through 2016.

Eoin Treacy's view With the help of Martin Spring and Johnson Matthey's historic platinum prices, I created this yearly chart of the platinum/gold ratio reaching back to 1946. It demonstrated that prices have mostly traded in a range between 1 and 2 since the early ‘70s. (Also see Comment of the Day on January 9th) This suggests the relative relationship holds during both secular bull and bear markets.

The ratio found support in early January and has since rallied back towards the parity level versus gold; breaking the yearlong downtrend. A sustained move below 0.94 would be required to question the consistency of the two-month uptrend.

In absolute terms platinum has rebounded sharply since testing the $1350 area at the end of December. It pushed back above the psychological $1700 level last week which represented the lower side of the overhead trading range. A sustained move back below $1600 would now be required to question medium-term scope for additional upside.

Gold also rebounded impressively from the region of the 200-day MA from late last year. It broke the downtrend from the September peak by late January and has been consolidating below $1800 since early February. It pulled back sharply from that area today to post the largest downward dynamic this year following Ben Bernanke's comments damped speculation that more QE would be required. This price action renews prior resistance in the region of $1800 and gold will need to continue to find support in the region of $1700 if the potential for a renewal of the medium-term uptrend is to remain credible in the short term.

Silver extended its advance above $35 yesterday but gave it up today suggesting at least a pause and consolidation is underway. The short-term upside can continue to be given the benefit of the doubt provided it holds above today's low near $33.80.

Palladium has held a progression of higher reaction lows since October and was less overextended than the other precious metals. It also pulled back today but a sustained move below $675 would be required to question potential for continued higher to lateral ranging.