The Growing Potential of Platinum
While most traders and investors have been laser-focused on gold and silver, they are ignoring a precious metal that could be essential over the next ten years. Platinum is facing a record deficit of one million ounces this year, according to the World Platinum Investment Council. The market is experiencing a perfect storm as industrial demand continues to grow while supply remains stagnant.
The Role of Platinum in the Automotive Sector
The automotive sector represents about 80% of global demand for platinum. Platinum is a critical element in catalytic converters, which are used to reduce harmful emissions in diesel and gasoline-powered engines. Despite solid demand from the auto sector, the growing Green Hydrogen economy will further impact the supply deficit.
The Potential Value of Platinum
Platinum prices continue to struggle despite the supply/demand imbalance. However, analysts see potential value in the precious metal. Commodity analysts at Commerzbank believe that the platinum price should see a significant recovery by the end of the year. Speculative positioning has reached maximum short territory, indicating a possible turnaround.
Platinum’s Relationship with Gold
Platinum is often influenced by gold prices, and currently, gold remains trapped in a trading range. Central banks continue to show solid demand for gold, but investor sentiment remains cautious due to the Federal Reserve’s hawkish bias and elevated interest rates. Until there are clear signals of a rate cut, gold may remain stagnant. However, platinum offers a potential value trade and should be monitored closely.
That’s it for this week. Have a great weekend!
