Platinum Prices Surge Amid Squeeze Fears: A New Precious Metal Drama

Platinum Market in Turmoil: A Surge in Prices

The platinum market has experienced a significant price surge, with spot prices in London jumping by 6.4% to $1,646.03 per ounce on Wednesday, marking the biggest intraday increase since 2020. Platinum futures also saw an uptick of 4.1% on Nymex. This sudden surge has raised concerns of a potential market squeeze, similar to the one witnessed in the silver market earlier this year.

The sudden blow-out in the differential between the spot price and platinum futures is unusual. The premium for the spot contract reached $53.45 per ounce, up from $28 just the day before. This unusual market behavior suggests a rush to secure physical platinum, with both institutional and retail investors scrambling to obtain the metal. The scenario mirrors the panic seen in the silver market, where prices spiked dramatically as investors tried to corner the market.

Platinum Squeeze: Market Imbalances and Supply Tensions

Despite expectations of ample global supply, the platinum market is facing significant liquidity issues. According to Dan Ghali, a senior commodity strategist at TD Securities, the market is tightening, with dislocations pushing prices to extremes. While global supply appears sufficient, China’s recent export of 140,000 ounces of platinum products in a single month has strained the market. This is the largest monthly export figure since data collection began, further contributing to the current supply concerns.

The unusual market behavior of platinum, with a sharp premium between spot and futures prices, has prompted fears of a repeat of the silver squeeze of 2021. The combination of supply strains and increased demand for physical platinum is causing a wave of anxiety among market participants. As investors rush to secure physical platinum, there is growing uncertainty about how the market will stabilize.

SuperMetalPrice Commentary: The Platinum Squeeze and Future Outlook

The platinum market’s recent surge and fears of a squeeze are reflective of broader market dynamics in precious metals. While platinum should have ample global supply, disruptions in liquidity and increased demand are fueling concerns of a repeat of past metal squeezes, like silver. The sudden price hikes are warning signs of deeper structural issues, and traders will be closely watching the supply chain and investor sentiment moving forward. If the platinum squeeze continues, it could reshape the market landscape for this precious metal, with potential ripple effects on other commodities as well.