The Federal Reserve’s new easing cycle is buoying the precious metals market, leading to significant gains in gold, silver, and platinum group metals (PGMs). Gold continues to dominate attention, but platinum is making notable strides, recently surpassing $1,000 per ounce for the first time in ten weeks, with September futures closing at $1,013.20, a 2% increase.
Analysts attribute the rise to lower interest rates, declining real yields, and a weaker U.S. dollar, enhancing the appeal of precious metals. The World Platinum Investment Council (WPIC) highlights another factor: increasing long-term deficits in platinum supply. Edward Sterck, Director of Research at WPIC, emphasized in a recent Kitco News interview that the market’s growing deficit will soon impact prices, with a projected 1 million ounce shortfall for this year.
Recent forecasts from the WPIC indicate an average supply deficit of approximately 769,000 ounces between 2025 and 2028, adjusted from earlier estimates of 546,000 ounces. Analysts expect that limited supply growth coupled with solid demand, particularly from the automotive sector, will drive these deficits. They revised South African production forecasts down by 179 koz and North American projections by 109 koz, reflecting industry challenges.
While demand remains strong, especially with hybrid vehicles relying on platinum for emissions control, the WPIC cautions that expectations for battery electric vehicle (BEV) growth may be overly optimistic. Despite a previous year-on-year growth of 30%, BEV demand is forecast to slow to mid-single digits in 2024, due to issues like high prices and inadequate charging infrastructure.
Investment demand is also anticipated to rise, with an expected 128 koz increase attributed to Chinese bar and coin purchases. As deficits continue to grow, analysts predict that above-ground platinum stocks will diminish, emphasizing the necessity for the market to draw on these stocks to address multi-year deficits. This confluence of resilient demand, supply risks, and depleting reserves underscores platinum’s compelling investment case moving forward.
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