Platinum price forecast: what next for vital rare metal?
The commodity has been on a rollercoaster recently, but what is the platinum price forecast?
The price of platinum, a very rare and incredibly precious metal, is currently in the news. Here we tell you what’s been going on, and what might happen in the future with a platinum price forecast.
What platinum does
Platinum is mostly mined in South Africa, Russia, Zimbabwe, Canada and the United States, and has a number of important industrial uses. While it is a scarce metal, more than 20 times rarer than gold, it is used primarily in:
Manufacturing: According to the World Platinum Investment Council (WPIC), platinum’s versatility keeps it in demand. Industrial use of platinum has increased nearly fourfold since 1980.
Healthcare: Platinum is a biologically compatible metal because it is non-toxic and stable. It does not react with, or negatively affect, body tissue. It is used in surgical instruments, implants, pacemakers and cancer treatment.
Environmental products: Platinum’s properties make it critical to reducing air pollution and in the construction of energy-efficient fibreglass.
Catalytic converters: Interaction with the surface of platinum converts toxic gases and pollutants from internal combustion engines into less toxic pollutants.
The demand for platinum in the car industry has been hit by falling demand for diesel cars. Petrol cars, which use palladium in the manufacturing process, have become more popular after the EU introduced tighter restrictions on polluting cars and diesels fell out of favour.
What appears to be driving the issues with the price of platinum has been the current shortage of semiconductor chips. This shortfall has, in turn, had an impact on the car industry. Car plants have shut and manufacturers have cut their forward predictions for the number of cars being made which, in turn, has had an impact on the price of platinum and its sister metals, rhodium and palladium.
In February 2021, analysts Johnson Matthey issued their annual platinum report. In the document, the company’s Alison Cowley pointed out that the pandemic had hit the price of platinum hard, as closures due to pandemic lockdowns had hit the automotive, jewellery and industrial sectors, leading to a lack of demand for the metal.
She wrote: “Combined autocatalyst demand for platinum, palladium and rhodium fell by 13%, as the first pandemic wave triggered temporary shutdowns at car plants, and consumers deferred new vehicle purchases.”
As the world started to recover from the pandemic, the price of platinum rose again to a more comfortable level, as we shall see.
Platinum price history: The last 12 months
How has the price of platinum performed over the course of the past 12 months? While prior performance is no indicator of what will happen in the future, it is still useful to see what has happened if we want to make a platinum price prediction.
When the markets opened on 28 September 2020, the price of platinum was $881.90 (£643.48) per ounce. The price hovered around this point for a month or so, dropping to a low of $849.30 on 15 October and shooting to a high of $918.50 on 23 October. It was in November, though, that the platinum price started shooting up. On 11 November, it closed at $865.10, after which it started a significant bull run, going up every day until 20 November when it ended the day at $954.10, a rise of more than 10% in the course of nine days.
While there was a little immediate pullback, with the price falling to $929.10 as of the start of trading on 23 November, the overall platinum price trend was an upward one and it broke through the $1,000 barrier on 1 December, when the price reached $1,002.20. It would not drop below the $1,000 market for quite some time. There was still room for growth, though, and on 4 December it reached a periodic high of $1,071.20. The price fell back a bit after that, but rallied again to close the year at $1,075.40.
When markets reopened on 4 January, an ounce of platinum was worth $1,085.40. It stayed at this price, roughly speaking, for most of the month, with some brief forays above the $1,100 mark. The price went up even further in February, with a 12-month high reached on 19 February when it climbed to $1,290.60. While this was the pinnacle of its value over the course of the last 12 months, there was still some encouragement, and the price of platinum stayed above the $1,100 mark until 17 June, when it dropped to $1,054.30. The fall in price was caused, at least in part, by semiconductor issues leading to a reduction in demand for the metal. The overall trend was now a downward one and, on 6 August, the price fell below $1,000 per ounce for the first time in 2021 when it dropped to $972.30. While there was a little bit of recovery, the price seemed to stay below $1,000 for September. Most notably, between 13 September and 20 September, the price fell from $955 to $912, a drop of 4.5% over the course of a week. There was some encouragement, though, and there was an early morning high of $1,000.30 on 27 September.
Platinum price forecast
LongForecast has a platinum price forecast for 2021 which sees it reach $1,045 at the end of the year. The site says that, in September 2022, the price should reach $1,213 and should fall to $1,155 a year from then. In September 2024, it should rocket up to $1,403 and then drop to $1,175 in September 2025.
Meanwhile, Coin Price Forecast said that the metal should hit $1,158 at the end of 2021. The site’s platinum price prediction says it will get to $1,297 a year from that and $1,479 at the end of 2023. 2024 should end with platinum worth $1,864, 2025 at $2,169 and 2026 at $2,511. On 31 December 2027, the site says that an ounce of platinum will be worth $2,607 and on the same date 12 months later, it should be worth $2,942. The platinum price forecast for the end of the decade is $3,159 and it should close 2030 at $3,228. In 10 years’ time, it is forecast it will be worth $3,451 and at the end of 2032 it will be worth $3,689. Finally, the site says the platinum price will be $3,946 on December 31 2033.
Last but not least, WalletInvestor has a platinum forecast which says it will be worth $1,086.42 in a year and $1,456.80 in five years.
It is hard to know whether it is overvalued or undervalued. On one hand, it is currently on a downward trend. On the other hand, the longer-term forecasts are positive and encouraging. This is one case where you should do your own research before making a decision as to whether to invest in platinum or not.
It might do. However, the question is how much it will go up and how quickly. You will need to do your own research, remember prices can go down as well as up, and never invest more money than you can afford to lose.
Potentially. The longer-term forecasts for the metal are encouraging, but forecasts are very often wrong. As ever, you will need to look into things yourself before deciding whether or not to invest in the precious metal.