Platinum: Will it shine in 2023?

Trading platinum and the metal’s price fluctuations often make the financial news headlines. Platinum is one of the most popular commodities among traders. Platinum belongs to the group of precious metals. Beginner traders may wonder why platinum is the talk of the town lately. This blog aims to give you meaningful information on platinum, thus expanding your trading horizons.

Platinum fundamentals

Platinum is a rare, stable metal that, owing to its diverse and distinctive chemical and physical characteristics, is often used in jewellery as well as medical, electrical, and chemical applications.

Platinum is one of the rarer elements in the Earth's crust. It may be found in some nickel and copper ores, in addition to some native deposits, the majority of which are located in South Africa, responsible for around 80% of the world's output. As a result of its rarity in the Earth’s crust, only a few hundred tonnes are produced each year. Because of the several significant applications it has, its value is very high, and it is one of the most important precious metal commodities.

Over half of the platinum mined is utilised in catalytic converters, which are parts of automobiles that transform hazardous gases into less-toxic emissions. According to United States Geological Survey (USGS) figures, over 30% of the 8.53 million ounces of platinum produced globally each year comes from recycled sources.

Trading Platinum: Price fluctuations

Platinum prices plunged nearly 27% on March 16th 2020, hitting an 18-year low, as investors unloaded precious metals in exchange for cash after the Federal Reserve’s second emergency interest rate cut failed to quell coronavirus fears across markets.

Spot platinum began 2022 at around $957 an ounce. The war in Ukraine boosted platinum prices that reached $1,121 per ounce on February 27th as countries imposed sanctions against Russia, the 2nd largest supplier in the world after South Africa.   

However, platinum prices fell in the next few months, hitting a 2022-low on August 28th ($837 per ounce). During the last months of 2022, platinum prices recovered some ground and ended the year at around $1,068 an ounce.

Commerzbank: Limited upside potential in the short term

Commerzbank’s analysts wrote in a report: “We see only limited upside potential in the short term. Platinum should trade at $1,050 by the middle of next year. With the rising gold price, platinum should continue to gain in the second half of the year and trade at $1,150 at the end of the year. The price difference to gold would then be $700, which would mean that platinum would catch up to some extent with gold.”

Mitsubishi Corporation: Platinum is essential for the green energy transition

Platinum is a critical metal used in electrolysis, the process of separating hydrogen from water molecules. According to some energy analysts, hydrogen demand as part of the green energy transition could provide long-term support for platinum. Precious metals analysts at Mitsubishi Corporation wrote in their 2023 outlook forecast: "Platinum will continue to attract new buying from, and possibly investment interest on the back of the hydrogen sector.”

Platinum supply deficit in 2023?

Market analysts at Standard ICBC Bank noted in a report included in the 2023 LBMA survey that “on the supply side, platinum mine output will remain constrained in 2023 due to power outages and maintenance at mines in South Africa. The global platinum market will shift to a deficit this year.”

According to the TD Securities platinum price forecast for 2023, the platinum price could fall to $875 in the first quarter of 2023, but then rise to $1,100 by the end of the fourth quarter.

Education and beginner traders 

Engaging in trading comes with a risk. Beginner traders should know that financial markets can be very volatile, with prices sometimes fluctuating quicker than expected. Such volatility may create opportunities, but it could also generate elevated risk. As beginner traders are inexperienced, the possibility of mistakes increases dramatically. Mistakes could lead to the loss of hard-earned funds.

Building a comprehensive trading strategy should include risk management. However, how can you design the right trading strategy if you are just starting to explore the trading world? The best idea is to study the fundamentals. You should learn basic trading terms and how trading conditions can affect your strategy.

There is a vast range of resources available online for you. Resources such as webinars, seminars, e-books and articles prepared by industry experts are provided by some brokers. Your main goal should be reading and understanding how trading works and how you can mitigate risks using cutting-edge risk management tools. Focus on improving your trading knowledge. Then, it will be easier to build a strategy and utilise risk management tools to reduce the possibility of putting your budget and financial goals in danger.

Does trading on macroeconomic news interest you? Learn how this approach works with our free webinars. Meet and interact with expert traders. Watch and learn from live trading sessions.

This material does not contain and should not be construed as containing investment advice, investment recommendations, an offer of or solicitation for any transactions in financial instruments. Please note that such trading analysis is not a reliable indicator for any current or future performance, as circumstances may change over time. Before making any investment decisions, you should seek advice from independent financial advisors to ensure you understand the risks.