Key Moments
- UBS now sees platinum reaching $2,500 per ounce after prices doubled in seven months to record highs.
- The bank attributes the rally mainly to strong investment demand and tight physical supply.
- UBS warns that platinum’s small market size could keep price volatility elevated.
UBS Boosts Platinum Price Target
UBS has raised its platinum price forecast again, citing strong investment inflows and limited physical supply. As a result, the bank now expects platinum to trade near $2,500 per ounce in the coming months.
This upgrade follows a sharp rally. Over the past seven months, platinum prices have doubled and reached record highs.
Macro Forces Support the Rally
Several macro factors have helped push platinum higher. These include expectations for lower U.S. interest rates, ongoing geopolitical risks, and concerns about U.S. dollar debasement.
However, UBS notes that industrial demand and jewelry consumption alone cannot explain the scale of the move.
Investment Demand Tightens the Market
Instead, UBS points to investment demand as the key driver. Strategists Giovanni Staunovo and Wayne Gordon highlighted elevated lease rates, which signal tight availability of platinum bars in London.
Moreover, platinum’s small market size magnifies price moves. Annual platinum consumption totals about 250 metric tons, far below gold’s roughly 5,000 metric tons.
Because platinum trades at a lower price than gold, investors can buy more ounces with the same capital. As a result, even modest inflows can move prices sharply.
| Metal | Annual Consumption (Metric Tons) | Market Traits |
|---|---|---|
| Platinum | 250 | Small market, high sensitivity to investment flows |
| Gold | 5,000 | Large, deep market with lower price sensitivity |
“If even a small number of investors switch from gold to platinum, the impact can be significant,” the strategists said.
Physical Bars Lead the Demand Story
So far, ETF holdings and futures positioning have edged lower this year. Even so, UBS believes investment demand has shifted toward physical bars.
Therefore, the bank expects clearer evidence of this trend in the next update from the World Platinum Investment Council.
China Could Add Fresh Momentum
UBS also flagged China as a potential source of new demand. In particular, the launch of physically backed platinum futures on the Guangzhou Futures Exchange could attract local investors.
These contracts are denominated in local currency, which may further boost participation.
Outlook: Bullish but Volatile
Despite its positive price outlook, UBS remains cautious. Excluding investment demand, platinum still sits in a fabrication surplus.
As a result, volatility is likely to stay high. Any further upside will depend on sustained investor interest and only gradual supply adjustments.
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