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Platinum futures: Price heading for return to YTD highs but will rise continue toward $1,500 and beyond?

By  Yoke Wong

Edited by Jekaterina Drozdovica

12:56, 16 November 2022

Platinum bars
Will platinum prices keep the momentum? – Photo: Shutterstock, Olegs Semjonovs

Platinum futures price jumped to an eight-month high in the first two weeks of November amid improving market sentiment as China eased its zero-Covid policy. 

The November platinum contract traded on the New York Mercantile Exchange (NYMEX) rose to $1064.30 a troy ounce (oz) on 10 November, the highest since 11 March 2022. Although prices have since fallen, it remained above $1,000 and at multi-month high. The November platinum futures last settled at $1042.30 on 14 November, up 11% from $939.40 two weeks ago. 

Platinum futures prices

Will the price of the previous metal maintain the momentum? Here we take a look at the latest platinum futures price predictions and market outlook. 

What are platinum futures?

Platinum futures are derivative instruments that use platinum as their underlying assets. Prices of platinum are traded on exchanges such as the NYMEX, part of the Chicago Mercantile Exchange (CME) group, and the Japan Exchange Group. 

According to CME, platinum traded on NYMEX is the most liquid exchange-traded product (ETP) in the world. As a result, NYMEX platinum futures are preferred by traders.

So how do platinum futures work? Platinum futures traded on NYMEX are denominated in US dollars and cents per troy ounce. According to the NYMEX platinum contract specification, the grade of platinum must be at least 99.95% pure and the minimum contract size is 50 troy ounces with a minimum tick price of $5. 

The contract trades electronically nearly around the clock, six days a week. Settlement of the contract is by delivery.  

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China’s easing of zero-Covid policy

In the latest platinum futures news, speculation over China potentially easing its zero-Covid policy has supported platinum futures prices – the country is the world's biggest car manufacturer and consumer of the metal used in autocatalysts. 

Platinum is a key raw material in catalytic converters, which convert toxic gases and pollutants in exhaust fumes into less-toxic gases.

Over the past year, China’s zero-Covid policy has led to widespread lockdowns across the country, causing a sharp decline in its industrial output and economic growth. On 11 November, the Chinese state department announced the country will cut the length of the quarantine period from ten to eight days. 

In the new measure, a person with close contact with an infected patient will be isolated for five days in a government facility and complete the remaining three days quarantine at home subject to a negative Covid test. This signalled that Beijing has begun to ease its strict Covid policy, which may kick-start its slowing economy. 

Platinum live spot price

Prior to China tightening its Covid policy in March this year, pent-up consumer demand for new vehicles was pushing platinum futures prices higher. The precious metal hit a high of $1,153/oz on 8 March. However, demand and prices fell when several Chinese provinces entered lockdown to combat rising Covid cases. 

Gold

2,338.64 Price
-0.960% 1D Chg, %
Long position overnight fee -0.0195%
Short position overnight fee 0.0113%
Overnight fee time 21:00 (UTC)
Spread 0.80

Silver

31.99 Price
-0.450% 1D Chg, %
Long position overnight fee -0.0200%
Short position overnight fee 0.0118%
Overnight fee time 21:00 (UTC)
Spread 0.048

Oil - Crude

79.18 Price
-1.230% 1D Chg, %
Long position overnight fee 0.0110%
Short position overnight fee -0.0329%
Overnight fee time 21:00 (UTC)
Spread 0.040

Oil - Brent

83.45 Price
-1.150% 1D Chg, %
Long position overnight fee 0.0004%
Short position overnight fee -0.0223%
Overnight fee time 21:00 (UTC)
Spread 0.090

As a result of the weaker automotive demand, platinum prices crashed to a 26-month low at $805/oz on 1 September before rebounding in the following months, CME’s platinum futures history data showed.

Supply uncertainty, global deficits to support platinum futures price

According to industry body the World Platinum Investment Council (WPIC) supply and demand outlook in September, the platinum market deficit could deepen to 219,000 ounces in 2023, compared with a 974,000 ounces surplus in 2022. 

WPIC projected the deficit to narrow to 80,000 ounces in 2024, and surge to 597,000 ounces in 2025 and 712,000 ounces in 2026. 

Johnson Matthey, a major manufacturer of products containing platinum group metals (pgm), said in its May report that “there are unusually large uncertainties surrounding Russian supplies in 2022”.

Russia is the world's second largest platinum producer after South Africa. According to data from Statista, South Africa produced 130 tonnes of platinum in 2021, while Russia’s output was at 19 tonnes. 

Johnson Matthey added:

“Mining and processing activities in Russia will ultimately be affected by economic sanctions and the withdrawal of Western businesses, but the extent and timing of the impact is difficult to quantify at this stage.”

Platinum futures forecast for 2023 and beyond

As a result of the supply uncertainty, some predictions were bullish on platinum futures price in the short-term. 

Algorithm-based price prediction website Wallet Investor, as of 16 November, expected the average platinum price to reach $1,053.55 in the next twelve months and continue to rise to $1,211.10 in five years’ time. 

In contrast, Trading Economics expected the average platinum prices to fall to $1,004 by the end of the fourth quarter, declining further to $933.745 in 12 months’ time. 

Note that analyst predictions on the platinum futures market can be wrong and shouldn’t be used as a substitute for your own research. Always conduct due diligence before trading, looking at the latest news, a wide range of commentary, technical and fundamental analysis.

Remember, past performance does not guarantee future returns. And never trade money that you cannot afford to lose.

FAQs

How are platinum futures priced?

Platinum futures are priced by bids and offers on electronic trading platforms.

Will platinum prices go up or down?

Nobody can say for sure whether platinum prices will go up or down in 2023. The market is volatile. Price movements could depend on supply and demand.

How to invest in platinum futures?

You can invest in platinum futures through brokers registered to trade on exchanges. However, given the settlement is by physical delivery, retail investors may prefer to gain exposure through investing in exchange traded funds, stocks of listed platinum producers and miners. Remember, only you can decide what’s the most appropriate instrument for you, depending on your risk tolerance, investing goals and experience in the markets.

Markets in this article

Platinum
Platinum
1042.05 USD
-24.35 -2.290%

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You can still benefit if the market moves in your favour, or make a loss if it moves against you. However, with traditional trading you enter a contract to exchange the legal ownership of the individual shares or the commodities for money, and you own this until you sell it again.
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