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Where's the price of platinum headed?

by , 13 April 2015

Just last month, the price of an ounce of platinum fell below $1,120. Levels not seen since the aftermath of the financial crisis in 2008.

A few weeks down the line and the price of the precious metal isn't doing much better.

So what's going on with the price of platinum? And is it likely to rise in value this year?

Read on to find out…

The ins and outs of the price of platinum

Just have a look at the price of platinum over the past few years on the chart below…

Chart of the platinum price

On the demand side of the equation, the weak economy in the Eurozone has hit the price of platinum hard.

The Eurozone is the world’s largest market for diesel cars. Diesel cars use platinum in their catalytic converters. And this makes up a staggering 40% of the overall demand for platinum.

On the supply side of the equation, this has recovered after the five-month strike that hit South African platinum mines last year. This had impacted supply as SA is responsible for the majority of the world’s mined platinum.

But now, supply is up and demand is down. And this means the market deficit (the gap between supply and demand) has fallen by about 60%.

So what does the rest of 2015 hold for platinum?

Despite issues with Greece in Europe, the Eurozone’s economy is showing signs of recovery. This includes a rise in car sales in the region for the first time in six years.

The economy is also recovering in India, which has introduced tighter emissions legislation. This should help boost demand from emerging markets.

The current lower prices are also good news for platinum jewellery. This makes up about 38% of platinum demand.

And there’s always the chance of more strikes this year South African platinum mine workers, which could reduce supply.

Metals consultancy, GFMS, believe the price of platinum is going to increase somewhat during the remainder of the year. They pencil in a rise of between $1,300 and $1,350 for the precious metal.

If you think there’s the chance of a recovery in the platinum price, you could buy into a platinum-backed exchange traded fund. Or buy platinum jewellery to try to take advantage of the current price slump.

So there you have it, where the price of platinum could be heading.

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Where's the price of platinum headed?
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