According to The Wall Street Journal, this year, platinum has surged by 14% outperforming the key metals such as gold and silver. A global push towards green energy has prompted investors to look to platinum. Moreover, the metal’s price was boosted by an announcement made by President-elect Joe Biden. He pledged to spend $2 trillion on green energy. Kirill Kirilenko, a precious-metals analyst at CRU Group, said that platinum began its rally due to this promise. “The metal, which has industrial uses as well as demand from investors, stands to benefit in the long term from a global push toward renewable sources of energy,” he said.
The main reason for the platinum’s rise was dropping gold prices. During the week from November 23 to November 27, gold lost 4.8%. The fact is that the promising results from Covid-19 vaccine trials boosted the global economic outlook and sapped demand for safe-haven assets, including gold. As a result, a mass sell-off of gold forced investors to switch to other metals. Some analysts suppose that platinum is a new leader as its price may soar in the near future.
Notably, ten years ago, platinum was one of the most expensive precious metals. At the moment, it is used in autocatalysts. However, higher prices made most automakers look for cheaper metals such as palladium. However, the lower demand from car makers led to the platinum oversupply. In response, platinum prices showed a drop.
During the last five years, platinum was trading flat. However, the coronavirus pandemic has changed the situation. The virus outbreak has caused imbalance between demand and supply. Analysts suppose that the metal market may face a record shortage of platinum by the end of the year. Last month, the World Platinum Investment Council, an industry group, upwardly revised the forecast for platinum’s deficit. Thus, demand would exceed supply for platinum by 1.2 million ounces. The previous estimates showed the shortage of just 336,000 ounces.
According to the data provided by WPIC, this year, the metal’s supply may decline by 18%. At the same time, the primary metal production is likely to slide by 21% to 1.3 million tons. Analysts foresee a bright future for platinum. Thus, demand is expected to advance amid rising interest in renewable-hydrogen technology and green energy. In the last few years, demand for the metal was rather low. However, at the moment, it is among the leaders in the precious metal markets.
