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| Platinum |
The platinum market has seen a significant surge in prices, raising concerns of a potential squeeze, following a volatile period in silver and gold markets. On Wednesday, spot platinum prices in London surged by 6.4%, reaching $1,646.03 per ounce, marking the largest intraday jump since 2020. This dramatic price spike has drawn attention from both institutional and retail investors, prompting fears of a potential market squeeze similar to the recent silver squeeze.
Platinum Market Disruptions and the Price Surge
The platinum price surge has been particularly unusual due to the sharp divergence between London and New York prices. While both markets typically trade in sync, the differential between the two reached a $53.45-per-ounce premium for spot prices over futures contracts, up from $28 the previous day. This unprecedented gap signals a rush to acquire physical platinum, as traders scramble to secure the commodity, much like what occurred in the silver market earlier this year.
The panic in the silver market saw prices reach all-time highs, driven by both institutional and retail buyers rushing to corner the market. Similarly, platinum is experiencing what some analysts, such as Dan Ghali of TD Securities, are calling a "tightening" of the market, with dislocations pushing the market to extremes. According to Ghali, these developments echo fears of a "silver-squeeze" moment in the platinum market.
Platinum Supply and Market Liquidity
Despite the apparent market tension, the supply of platinum remains robust. China, for instance, exported 140,000 ounces of platinum products in the past month, the highest amount since data collection began. However, market liquidity appears to be under strain, which has caused the price volatility. Analysts point out that while global platinum supply should be adequate, the current conditions indicate stress within the system.
This tight liquidity is raising alarms as it is out of sync with the overall supply fundamentals. Investors are concerned that these market disruptions could lead to further price swings, and some worry about the sustainability of the current surge. The situation is further complicated by global economic uncertainties and the potential impact of upcoming regulatory changes in key platinum-producing regions.
ScrapInsight Commentary
The platinum market’s recent price surge, driven by tightening liquidity and fears of a market squeeze, mirrors the volatility seen in silver. While global platinum supply remains strong, market dislocations and investor panic suggest continued price instability, which may affect the broader precious metals market in the short term.
