Will the price of pt950 platinum rise in 2024? Is investing in platinum or gold more cost-effective?

Platinum, as a precious metal investment asset, has long been less well-known than gold, but its investment potential is equally worth attention. Compared to gold’s purely financial attributes, platinum combines industrial applications and jewelry value, resulting in different price trend characteristics. As we enter 2024, the Federal Reserve’s monetary policy faces new adjustment directions. How will this impact platinum prices? This article will analyze in depth from multiple dimensions including macroeconomics, industry demand, and comparison with gold.

Impact of the Federal Reserve Policy Shift on Platinum

Since the beginning of 2024, the pace of U.S. inflation decline has significantly slowed, and market expectations for Fed rate cuts have adjusted accordingly. The anticipated 7 rate cuts in Q4 last year have been revised down to a conservative estimate of 3-4 cuts, with the earliest cut now delayed from March to June. This change in policy expectations has exerted some pressure on pt950 platinum prices.

Maintaining high interest rates will suppress investor demand for precious metals because the opportunity cost of holding interest-free assets increases. However, from the long-term trend of U.S. money supply growth, M2 year-over-year growth has started to rebound since the second half of last year. Although the increase is modest, it at least provides some support for platinum.

Notably, in Q2 2023, platinum prices rose from $907 to $1,133, driven by South Africa’s power crisis. Since South Africa controls 91% of global platinum group metal production, large-scale power outages there directly led to a decline in platinum output, pushing international prices higher. This case clearly demonstrates the decisive role of supply-side shocks on platinum.

Industrial Cycle Opportunities for Growth

Platinum’s uniqueness lies in its high industrial application characteristics. Globally, automotive catalytic converters are the main demand source for platinum, with growth in car production directly correlating with increased platinum consumption.

Currently, global car production is steadily increasing, especially in China, which has maintained relatively high annual growth since 2020. This lays a foundation for industrial demand for platinum in 2024. From an economic cycle perspective, if the Fed maintains a relatively loose stance and global manufacturing demand shows no signs of decline, conditions for platinum prices to rise will gradually emerge.

Platinum’s Substitution Advantage over Palladium

Platinum and palladium can achieve 1:1 substitution in catalytic converters, providing an additional demand source for platinum. Since 2018, platinum prices have been consistently below palladium, motivating companies to replace palladium with cheaper platinum.

Currently, platinum and palladium prices are close, and this substitution trend is expected to continue until 2025, after which palladium may reverse and substitute platinum. In other words, there is a clear bullish outlook for platinum’s substitution demand over the next two years.

Additionally, geopolitical factors reinforce this logic. Russia is a major supplier of palladium (accounting for 40%), and the increasing dependence of Western companies on Russian supplies is gradually being recognized as a risk. In contrast, substituting palladium with platinum can diversify supply chain risks, providing long-term support for platinum demand.

Long-term Comparison of pt950 Platinum Price and Gold

The difference in price performance between these two precious metals stems from their fundamental properties. Gold’s industrial application proportion is much lower than platinum’s, allowing gold’s financial attributes to be fully leveraged. Over the past 20 years, against the backdrop of the US dollar’s continuous depreciation, gold has served as a safe-haven asset, with gains far exceeding those of platinum.

Conversely, platinum’s higher industrial attribute means its price is more influenced by the automotive cycle, economic prosperity, and other real economy factors. When the global economy faces pressure and manufacturing demand declines, platinum often underperforms compared to gold.

However, this also means that during economic upswings and accelerated industrial activity, platinum has the potential to outperform. The 2020-2021 market performance is a clear example: the pandemic triggered Fed “money printing,” interest rates fell rapidly, and money supply increased significantly. Platinum rose from $852 in March 2020 to $1,319 in February 2021, marking the largest increase in nearly a decade.

Price Forecast and Investment Value in 2024

According to data from the World Platinum Investment Council, platinum has entered a continuous shortage phase since 2023, which is expected to extend until 2027. From a long-term perspective, the scarcity of platinum is increasing, giving it medium- to long-term investment value.

For 2024, authoritative institutions like Goldman Sachs forecast a price range of $800 to $1,100. At the current price of around $900, the downside risk is about $100, and the upside potential is about $200, resulting in a risk-reward ratio of 1:2, which is quite favorable for investors.

Technical signals also support this outlook. Currently, the COT net position index for platinum is at a ten-year low, reflecting a relatively concentrated short position in the market. Once prices start to rise, short covering could trigger a short squeeze, leading to rapid upward movement, which enhances the attractiveness of entering at the current level.

Investment Options and Risk Tips

Like other commodities, platinum investments can be flexibly executed through derivatives such as Contracts for Difference (CFDs). Choosing regulated trading platforms and fully utilizing stop-loss and take-profit functions are fundamental principles to control risks.

It is important to emphasize that, as a commodity with strong industrial attributes, platinum prices are affected by multiple factors. Macroeconomic policies, industry cycles, supply shocks, geopolitical risks, and other factors can cause short-term volatility. Investors should make decisions based on their risk tolerance and investment horizon.

Conclusion

In summary, the outlook for platinum prices in 2024 is optimistic. The Fed’s moderate easing monetary policy, steady growth in the global automotive industry, substitution demand for palladium, and long-term supply shortages all support platinum. Compared to gold, which has prominent financial attributes and may outperform in the long run, platinum’s medium-term upside potential is worth noting if investors are optimistic about the global economic recovery. The key lies in choosing the right timing and tools, and adjusting strategies flexibly according to market rhythm.