Platinum set for strongest annual gain in nearly four decades – Commerzbank

The Platinum price has risen by more than 80% in the year that is coming to an end, putting it on track for its strongest annual gain since exchange trading began 38 years ago. The annual high was recorded in October at just over $1,730 per troy ounce and was almost reached again at the beginning of December, which corresponds to the highest level since February 2013. The price increase was driven by two factors: significant undervaluation compared to Gold and the tight market situation, Commerzbank's commodity analyst Carsten Fritsch notes, Commerzbank's commodity analyst Carsten Fritsch notes.

Undervaluation vs. Gold and tight supply drive Platinum surge

"For a long time, the price of Platinum lagged behind the rise in the price of Gold. As a result, the Gold/Platinum ratio reached a record level of almost 3.6 in April, meaning that an ounce of Gold was more than three times as expensive as an ounce of Platinum. Jewelry buyers and investors then discovered Platinum as a cheaper alternative to Gold. The price ratio then fell back to around 2.5, where it has remained since the middle of the year, with some fluctuations. The price difference between Gold and Platinum is currently more than $2,500 per troy ounce. This is significantly higher than at the beginning of the year. In absolute terms, Platinum is still lagging behind."

"The Platinum market is expected to be significantly undersupplied for the third consecutive year, according to forecasts by the World Platinum Investment Council. However, the supply deficit is expected to be lower than was anticipated six months ago. The WPIC expects a slight supply surplus next year, as demand is expected to decline by 5.6%, while supply is expected to increase by just under 4%. The slowdown in demand affects almost all important areas."

"Further upside potential is likely to be limited. This is because, unlike in the previous three years, the market will no longer be as tight in the coming year, and the strong tailwind from the Gold price is also likely to ease. Inventories, which have fallen sharply as a result of the significant supply deficits of the last three years, with the stock-to-use ratio now at just over 40%, are likely to provide downside support for prices. We expect Platinum prices to develop largely in line with Gold next year and to rise to $1,800 per troy ounce by the end of 2026. This would correspond to a price ratio of 2.4."