Investing.com — UBS Global Research maintains a cautiously optimistic view on oil prices, with a price target of $1,100/oz by mid-2025 in a note Monday. The note notes that while market conditions are currently challenging, there are factors that could support this price target in the coming year.
One of the main factors behind this outlook is the expectation that the US Federal Reserve will soon begin its easing cycle. Lower interest rates are expected to support real assets, including platinum.
“But we expect platinum to lag gold until lower interest rates support stronger industrial activity,” the analysts said. This implies that while platinum may ultimately benefit from a shift in the economic environment, it may not be the first to respond compared to other precious metals such as gold.
For investors with a high risk tolerance, UBS continues to recommend managing the downside price risks associated with platinum. The price of the metal can be volatile, and current market conditions suggest it is wise to remain cautious despite the modestly positive long-term outlook.
Chinese platinum imports were robust, especially in the first half of 2024, with imports exceeding 59 tonnes. This figure surpasses the previous record of 53 tonnes in 2021. However, June imports of 4.3 tonnes were slightly weaker, indicating possible short-term fluctuations in demand.
China remains the world’s largest consumer of platinum, consuming 66.1 tons in 2023. Last year, China imported nearly 102 tons of platinum, indicating some level of stockpiling. Despite this, platinum demand in China has shifted in recent years.
Traditionally, China’s jewelry sector had the highest demand for platinum. However, over the past five years, demand in this sector has more than halved. The glass industry has now become the largest consumer of platinum in China, thanks to the construction of new display glass factories. This sectoral shift reflects changes in consumer preferences and industry requirements.
The decline in demand for platinum jewelry has been attributed to the loss of the metal as the most prestigious jewelry material. According to Johnson Matthey (LON:), this decline is caused by the poor price development of platinum. The last time platinum was priced higher than gold was in 2015, and currently Chinese consumers are showing a clear preference for gold jewelry over platinum.
Another factor affecting platinum demand in China is the decline in car production this year compared to last year.
Given these challenges, UBS has revised down its platinum price forecasts for December 2024 and March 2025 by $25/oz.
