Platinum Stars Mad Rally: Why Is the Metal Pumping so Violently?

Platinum has reached prices of over $1,400 after being dormant while its sibling, gold, was in the spotlight due to its impressive performance. Nonetheless, a perfect storm of low inventories, a newfound interest in its jewelry use case, and the rise of Eastern buyers is pushing the metal to reach even higher levels.

Platinum Outshines Gold in Continued Rally

Platinum had an excellent month, with its prices rising by nearly 40% and outperforming gold, its closest sibling, in capital markets. This has left investors wondering about the causes of this rally, which has taken the metal to price levels not seen in nearly 11 years.

Platinum futures registered prices of over $1,400 this Thursday, and experts predict that it will keep going higher due to a combination of factors that will keep making the metal attractive from an investment standpoint.

One of these factors is the limited supply of above-earth platinum inventories, as analysts declare that platinum markets have experienced noticeable tightness for some time. According to numbers from the World Platinum Investment Council, there will be a supply deficit of 1 million ounces this year, which can keep driving prices up.

In addition, the demand derived from Asian jewelry has risen, as artisans are trying to substitute gold, which has reached all-time highs several times this year, with platinum.

Yang Yang, a deputy general manager at a large retailer in Shuibei market in Shenzhen, a center of activity for Chinese jewelers, stated that this transition has been accelerating this month. “Some gold workshops are now trying to tap into the surge in demand. But the transition isn’t easy, as the two metals require very different craftsmanship,” she stated.

Investment-driven demand has also risen in the East.

This could lead to a continued rise in platinum prices while gold cools down. However, gold has different drivers behind its price, with the central bank reserve use case also pushing its price up as long as geopolitical issues keep moving institutions to invest in “safe haven” assets.

As an extension of the platinum rally, palladium and other metals are also expected to follow, registering price increases in the short term.

Read more: Peter Schiff: Gold Bull Market Has Kicked Into a Higher Gear