The week has started with platinum prices exhibiting signs of steadiness as the metal is currently trading within a tight range. This is a marked departure from previous weeks when the metal would rally strongly and then pull back shortly after.
Spot prices of the metal hovered around $2,150 as the dollar stabilized and traders assessed the macro picture in the U.S. after the Supreme Court ruled that Trump’s “liberation day” tariffs were illegal but Trump responded by issuing threats of 15% tariffs. The platinum market remained choppy, a sign that neither bulls nor bears had a firm hand on the price direction.
The decision of the Supreme Court on the trade tariffs brought a wave of uncertainty regarding trade policy, and platinum traders are still working out the possible implications that this ruling could have on economic growth and how inflation would be affected going forward.
Yields on U.S. Treasuries are another factor that is currently affecting metal prices. Benchmark 10-year bonds are yielding a return of approximately 4.07%. Lower yields boost precious metal markets, though any strengthening of the USD would temper that tailwind and exert downward pressure on prices as holders of other currencies find dollar-priced precious metals more expensive.
Inflation is also currently exerting influence on the trajectory of metal prices. PCE data show inflation is still elevated to a degree that is nudging the Fed to keep interest rates higher for more time even if indicators of growth are ticking downwards. When interest rates remain high, there is pressure on precious metal prices since they are non-yielding.
Deficits in the supply of the metal are expected to persist, and that provides a cushion to keep prices elevated rather than reducing. It is therefore expected that the market will remain sensitive to and respond strongly to any news headline that affects the supply of platinum.
Demand for the metal appears mixed depending on which segment you look at. Forecasts indicate weak demand in the jewelry segment, especially in China. However, the use of the metal in the automotive sector is growing, which could support prices in the near term. The mixed signals on the demand front explain why the price may rally and then retreat because not all demand segments are behaving in the same way.
As things stand, the price of platinum looks set to concentrate around the $2,150 range until something major happens to trigger a change in either direction. You can be sure that companies like Platinum Group Metals Ltd. (NYSE American: PLG) (TSX: PTM) are tracking all the factors currently influencing the commodity’s price in order to ascertain how their revenue forecasts could be impacted this year.
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