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Informist, Friday, Jun. 20, 2025

 

By Ashutosh Pati and Pallavi Singhal

 

NEW DELHI – Platinum prices surged to a near-11-year high of $1,350 per ounce Thursday, driven by tight supply and strong demand, with geopolitical tensions providing a boost as investors sought out safe havens. Platinum has climbed around 41% this year, outpacing even gold, as investors turn to cheaper alternatives, given that the rally in gold seems to have exhausted itself.

 

"Prices of the metal have risen sharply this year, powered by a combination of constrained supply, strong jewellery restocking, and growing investor confidence post-London Platinum Week," said Ajay Kedia, director at Kedia Advisory.

 

The muted reaction of gold to the worsening conflict in West Asia suggests the rise in price of the yellow metal, nearly 30% since the beginning of 2025, is increasingly seen as exhausted, Thu Lan Nguyen, head of foreign exchange and commodity research at Commerzbank, said in a report. "This is also supported by the recent sharp rises in other precious metals, such as silver and platinum, which are apparently being used as alternatives to gold," Nguyen said.

 

MORE UPSIDE POSSIBLE

The gold-platinum ratio has seen a sharp reversal, suggesting further upside in the metal, analysts said. The ratio, which measures the ounces of platinum required to buy an ounce of gold, has dropped to 2.743 from a high of 3.573. A falling ratio typically means strength in platinum or undervaluation of gold.

 

"The Gold-Platinum ratio has begun to fall from its multi-year high of 3.573, suggesting either a gold correction or further platinum upside," said Kedia. The metal's broader use in diesel vehicles, hydrogen energy, and jewellery supports a bullish case, he added.

 

CONTRIBUTION OF JEWELLERY

Meanwhile, demand for platinum jewellery continues to rise with the surge in gold prices pushing consumers towards platinum as a more cost-effective alternative. "This trend is particularly evident in Asia, where platinum fabrication and restocking activities are gaining momentum," Kedia said.

 

Simultaneously, platinum's appeal as an industrial metal used in hydrogen energy systems, diesel catalytic converters, and electronics gives it resilience against shifting automobile and clean energy trends, he added.

 

According to the World Platinum Investment Council, demand for the metal for jewellery is expected to rise 5% in 2025 to 2.1 million ounces. The council last month raised the expected deficit in the platinum market for 2025 due to upward revisions in global platinum demand and risks to supply. The council had said platinum's significant price differential to gold will continue to be a key driver of the growth in demand.

 

The council sees the global platinum market in a deficit of 966,000 ounces this year, higher than the 848,000 ounces projected earlier. This will be the third consecutive year the market will be in a deficit. The market had recorded a deficit of 992,000 ounces in 2024 and 809,000 ounces in 2023.

 

"This anticipated shortfall, which will draw down existing above-ground inventories, is being driven by demand from the automotive sector and, notably, a surge in Chinese interest in jewellery, bars, and coins," Ole Hansen, head of commodity strategy at Saxo Bank, said in a note to clients. Hansen said China recorded its highest platinum imports in a year in May, spurred by the metal's relative price stability and its significant discount to gold. The shortfall could be accelerated if the current demand from investors continues, Hansen added.

 

TECHNICAL OUTLOOK

However, an analyst at Commerzbank sees warning signs that the surge in prices have come to an end for now. "The platinum ETFs (exchange traded-funds) tracked by Bloomberg have registered considerable outflows in recent days," Carsten Fritsch, commodity analyst at Commerzbank, said in a report. "Within a week, their holdings have fallen by almost 190,000 ounces, which means that almost all inflows since the beginning of the year have been wiped out. Apparently, ETF investors see the significantly higher price level as an opportunity to sell."

 

In the short term, the resistance for platinum is seen at $1,390 per ounce in the near term, according to Kedia Advisory. Support is seen at $1,230 per ounce and then at $1,165 per ounce.  End

 

US$1 = INR 86.58

IST, or Indian Standard Time, is five-and-a-half hours ahead of GMT

 

Edited by Rajeev Pai

 

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