The price of Platinum jumped 5.6% in just one day, hitting $1,090 per troy ounce, its highest level in almost a year. Meanwhile, Palladium climbed about 8% to just over $1,055 per troy ounce, a peak not seen in three and a half months. Predictions suggest a shortage in Platinum group metals, but demand may decline in some areas. Although prices surged in recent months, those increases were usually temporary. To maintain higher prices for Platinum and Palladium, clear tariff policies are essential. Both metals are currently cheaper than Gold, trading at a ratio of over 3:1 compared to Gold. Platinum’s sudden increase—5.6% in one session—responds to renewed supply worries. Markets are reassessing shortages in Platinum group metals (PGMs), driven by recent data indicating lower production. The rise to $1,090 per troy ounce reflects a shift in market sentiment as new fundamentals come into play. Palladium’s rise, an 8% jump to over $1,055, is even more remarkable. This marks its highest price in the last three and a half months, largely due to concerns about production levels and a hopeful outlook for the auto sector. However, forecasts also warn of declining demand, especially in catalytic converters, as electric vehicles become more common. This change will take time, limiting price increases unless production issues are resolved. While these price changes are significant, it’s not the first time we’ve seen quick rallies in recent months. Such spikes often fade as market positions balance out. Short-term speculation likely drove this current increase, particularly since both metals are trading at substantial discounts compared to Gold—over three times cheaper. Policy uncertainty continues to impact overall trends. Specifically, unclear trade tariffs distort medium-term values for industrial metals. Without a clearer stance from major economies like China and the US regarding resource treatment, the recent rise in PGMs may not be sustainable. Reviewing options volume and implied volatility shows an uptick in both. This points to hedging rather than strong directional movement. The slight flattening of shorter maturity skew indicates traders are adjusting their upside bets rather than pursuing them aggressively. It’s crucial for traders to consider both spot prices and the structure of forward curves or risk reversals, as focusing only on spot moves might lead to missed opportunities. What matters now is how long this price squeeze lasts. If backwardation expands or deferred contracts start to align, it would indicate a real change in supply expectations. Johnson Matthey’s recent 2024 forecast for a deficit in Platinum adds further concern. However, with slow automotive demand, it’s essential to distinguish between investment activity and actual sector demand. Additionally, unseen inventory levels might support the market longer than futures prices suggest. As we analyze these trends, we notice that physical demand from the Asia-Pacific region—particularly from Japan and South Korea—could play a more significant role than previously thought. A small increase in demand there could stabilize prices even if recycled materials cover part of the gap. In summary, prices have surpassed recent resistance levels, going through key thresholds. Still, trading activity has not shown the expected follow-through for a long-term rally. Caution may arise due to ongoing uncertainties regarding macroeconomic data from Europe, leading to cautious trading. In this environment, it’s important to focus not only on chart movements but also on updated forecasts for auto catalyst launches and refinery outputs. Traders who stay alert to these changes will be best positioned to react to potential price rises or corrections in the coming days.

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