Platinum higher as supply deficit and Chinese demand lift sentiment

Mon May 26 2025

Platinum is showing tentative signs of revival as key resistance levels come under pressure in the wake of tightening fundamentals and improving sentiment.

The price of platinum has languished over the past decade, drifting largely sideways while gold surged on the back of central bank buying. As a result, the gold-to-platinum ratio has widened dramatically — from near parity to 3.2:1, meaning one ounce of gold now buys more than three ounces of platinum.

According to Ole Hansen, head of commodity strategy at Saxo Bank, this valuation gap is beginning to attract renewed interest. “Platinum, an almost forgotten metal that has for a long time been struggling for momentum, shows signs of life with key upside levels being challenged,” Hansen said in a market note.

Market deficit deepens

Fundamentals are increasingly supportive. The World Platinum Investment Council (WPIC) forecasts a market deficit of close to one million troy ounces in 2025 — the third consecutive year of undersupply — driven by resilient automotive demand and falling above-ground inventories.

The latest Platinum Quarterly highlights a structural imbalance, with stockpiles steadily being depleted. This tightness has coincided with a resurgence in Chinese buying, as investors and jewellers look to platinum as a stable and lower-cost alternative to gold. April saw China record its highest monthly import volume in over a year.

Technical levels under pressure

Platinum has averaged around US$955 per troy ounce over the last 10 years. A sustained breakout will require the metal to clear resistance near US$1,012, and ultimately the long-term downtrend from 2008, currently near US$1,025 on a monthly close, according to Hansen.

“Eventually, the narrowing trading range — currently being challenged to the upside — will yield a breakout,” Hansen noted saying the recent gains following a US-China trade truce lifted economic sentiment and reduced demand for safe havens such as gold.

Investment flows steady

While futures traders remain largely neutral, recent inflows into Western-listed platinum exchange-traded funds (ETFs) indicate a slow recovery in investor confidence. Holdings have rebounded to 3.18 million troy ounces from an April 2024 low of 2.89 million, although still well below their 2021 peak.

The sector may garner further interest during London Platinum Week, taking place from May 20 to 22. Organised by the London Platinum and Palladium Market (LPPM), the event gathers global stakeholders to discuss developments and strategies across the platinum value chain.

Source: https://www.proactiveinvestors.com.au/