Platinum Price Guide: What Drives Platinum Prices?

While Gold (XAU) often takes centre stage in the precious metal trading scene, Platinum (PL) boasts unique properties that make it valuable in various industries and potentially in the trading world. That’s why it’s important to understand its key characteristics and what influences Platinum prices before getting started with CFD Platinum trading.

Let’s explore in this article what Platinum is, where it comes from, its major applications, and the factors that influence Platinum price movements:

TL;DR

• Platinum is considered one of the rarest, purest and heaviest metals.
• It can be viewed as a precious and industrial metal.
• The metal’s industrial applications are wide with manufacturing, healthcare, environmental and renewable power uses.
• The price of Platinum is often expressed in American Dollars (USD) per ounce.
• Platinum prices can potentially be affected by the USD value, geopolitical tensions, mining site discoveries, global economic growth, jewellery and industrial demand, recycling methods, and trader sentiment.
• Platinum trading with Contracts for Differences (CFDs) on Platinum and CFDs of Exchange-Traded Products (ETFs)* which track Platinum price movement can be considered a way to gain exposure to its price volatility.

*Availability depends on the individual operator.

What Is Platinum?

Platinum, denoted by the chemical symbol Pt, is a shiny silver-white precious metal renowned for its unique properties. It exhibits catalytic capabilities, enabling it to accelerate or initiate chemical reactions without being consumed in the process.

The scarcity of Platinum enhances its reputation as a precious and exclusive metal. Its resistance to corrosion and ability to endure extreme conditions further elevates its appeal. Platinum also boasts remarkable density, making it unusually heavy for its size.

Additionally, its high purity contributes to its hypoallergenic nature, making it a preferred option for individuals prone to metal allergies.

Where Can Platinum Be Found?

Unlike some other metals such as Copper (HG) and Silver (XAG), Platinum isn’t readily found on Earth’s surface or near it. It occurs naturally as a scattered element, often mixed with other metals deep within the Earth’s crust. These metals are often referred to as Platinum-group metals (PGMs) which include Platinum alongside other valuable metals like Palladium (PA).

Extracting Platinum involves specialised mining techniques depending on the deposit type. Once extracted, the ore goes through a complex refining process to separate Platinum from other metals in the mix through specialised facilities.

What Is Platinum Mostly Used For?

Platinum, commonly linked with jewellery, serves a broader spectrum of industries.

It is particularly important in automotive manufacturing, notably in catalytic converters and fuel cell electric vehicles (FCEVs). Moreover, it finds application in the production of nitric acid, crucial for fertilisers, as well as in the petrochemical and glassmaking industries.

Platinum also holds promise in emerging fields like the hydrogen economy. In recent times, the metal has also gained traction as an investment and trading option.

What Are the Largest Platinum Producers?

As of 2024, South Africa remains the world’s leading producer of Platinum, followed by Russia. Zimbabwe, Canada, and the United States are also Platinum producer countries to a lesser extent.

Northam Platinum Holdings (NPH.JO) is an example of a key PGM miner. Impala Platinum (IMP.JO) and Anglo American Platinum (AMS.JO) are holdings of companies operating large Platinum mines. Vale (VALE) is an important nickel producer which produces Platinum during its refining processes.

Examples of Platinum Trading Venues

For those seeking exposure to the Platinum market, various trading venues provide Platinum prices. The London Platinum Market Limited (LPPM) and the New York Mercantile Exchange (NYMEX) from the CME Group are the two most common ones.

Usually, the NYMEX presents prices for standardised Platinum futures and options contracts, while the LPPM focuses on prices more used on trading the physical Platinum and Over-The-Counter (OTC) markets.

Platinum Trading Hours

Platinum prices through LPPM are set through auctions twice a day: once at 09:45 AM London time (GMT) and once at 14:00 PM London time (GMT). These prices are used by the industrial metals exchange London Metal Exchange (LME) which offers options to trade mostly futures and options on Platinum.

Regarding the Platinum price on the NYMEX, the electronic futures trading hours on the CME Globex run from Sunday to Friday, 5:00 PM - 4:00 PM Central Time (GMT +5), with a 60-minute break every day at 4:00 PM Central Time (GMT +5).

What Do the CFDs on Platinum Represent on Plus500?

For traders interested in Platinum trading, commodity Contracts for Difference (CFDs) could be a way to potentially speculate on the bullish and bearish price movements of Platinum without physically owning the metal.

To trade commodities with Plus500, you enter an agreement with the CFD provider to exchange the difference in price between when you enter and when you exit your Platinum CFD trading position.

A distinctive feature of CFDs is leverage, which allows you to control a larger Platinum position with a relatively smaller initial investment, potentially magnifying your profits. But while leverage can amplify gains, it can also significantly amplify losses if the market moves against you.

CFD trading can be complex and carries inherent risk. The volatility of the Platinum market, coupled with the complexity of CFDs, makes them a potentially risky trading vehicle for beginner traders.

On the Plus500 trading platform, the Platinum CFD reflects the price per troy ounce in USD, based on underlying CME Group Platinum futures contracts adding the Plus500 fee.

What Factors Influence the Price of Platinum?

The evolution of the supply and demand relationship plays a crucial role in any commodity market, which often influences the value of commodities like Platinum. Let’s take a look at the main drivers of the commodity price:

Value of the American Dollar (USD)

The USD typically has an inverse relationship with the price of the most traded commodities like Platinum, as they are priced in USD. When the USD strengthens compared to other currencies, commodities become more costly for holders of other currencies — and conversely, when the USD weakens relative to other currencies. It might be relevant for Platinum traders to monitor the Forex market closely, especially the most traded currency pairs.

Platinum New Mining Site Discoveries

The discovery of new Platinum mining sites holds the potential to increase the overall supply of Platinum. Additionally, it can influence market sentiment and trader perceptions, intensify competition among Platinum producers, and drive technological advancements in exploration, extraction, processing, and refining techniques. These factors can potentially contribute to Platinum price fluctuations.

Political and Economic Instability in Major Platinum-Producing Countries

Given that over 70% of global Platinum supply originates from South Africa, with Russia contributing over 10% (as of 2024), any political or economic instability in these nations can significantly impact Platinum prices by potentially disrupting the supply side of the commodity.

Changes in Mining Regulation in Platinum Mining Areas

Mining regulations can oversee important elements of the extraction and refining process, encompassing environmental protocols, labour standards, and mineral rights. Any modifications of these regulations can have ripple effects on production costs, supply dynamics, and investor sentiment, which are likely to influence the Platinum prices.

Automotive Demand

Between 2019 and 2023, the automotive industry was the largest consumer of Platinum, accounting for a significant 30-44% of total demand. This dominance is particularly evident in Europe and Japan. It plays a vital role in autocatalysts for cleaner emissions, spark plugs and sensors for optimal engine performance, and even holds promise in future Fuel Cell Electric Vehicles.

However, its dominance faces potential challenges. Technological advancements in alternative catalyst materials and stricter emission regulations that allow for alternative solutions could impact Platinum demand. Additionally, the ongoing substitution with palladium, whose price fluctuations influence manufacturers’ choices, can also influence the demand for the metal.

Wider Industrial Platinum Uses

Platinum’s physical properties, including its non-toxic nature, stability, and exceptional catalytic abilities have propelled it into a wide range of industrial uses. These include applications in the chemical industry (nitric acid), electrical applications (hard disk drives), and glass manufacturing (LCD glass). The metal can also be used in medical and biomedical fields (Platinum-based drugs, surgical instruments, electro-mechanical implants, orthopaedics). Additionally, Platinum has applications in petroleum refining, particularly in reforming and isomerisation processes for Gasoline (RB) fuel production.

Jewellery Trends

Platinum is quite popular in fine jewellery, making it sensitive to shifts in consumer taste and fashion trends, which can positively or negatively influence Platinum prices. Additionally, the diversity of jewellery preferences across cultures and regions can also affect demand for this particular metal depending on potential changes in cultural inclinations or economic conditions in significant consumer markets, such as China, India, and Japan.

Recycling

While mining continues to be the primary means of sourcing Platinum, a sustainable alternative is steadily gaining momentum: Platinum recycling. Given Platinum’s durability, it can be recycled from various end-of-life sources. This can include catalytic converters, jewellery, and industrial catalysts. Innovations in recycling technologies have the potential to influence Platinum prices, as they can impact the metal’s supply side to some extent.

Traders Sentiment

Behavioural finance and trading psychology can be important aspects of Platinum trading. Traders’ emotions, cognitive biases and perceptions can influence their trading decision-making processes and potentially influence the overall Platinum prices. This can sometimes lead to trends and price movements that may not always align with fundamental factors.

Considering all these various factors can help traders get a clearer picture of what influences the supply and demand dynamics and drives Platinum prices up or down in the commodity market.

Platinum Prices — Frequently Asked Questions (FAQs):

Platinum vs Gold prices - Is Platinum cheaper than Gold?

Even though the price of both metals changes every day, Platinum prices per ounce are generally globally cheaper than Gold prices per ounce. As of April 2024 for instance, Platinum can be traded at around $1,000 per ounce, while Gold can be traded at more than $2,300 per ounce.

Where can I find Platinum prices?

Platinum prices can be found on trading venues such as the London Platinum Market Limited (LPPM) and the New York Mercantile Exchange (NYMEX) of the CME Group, specialised websites, trading platforms and CFD providers like Plus500.
*Plus500 prices are based on the underlying asset and include additional fees.

What drives Platinum prices up or down?

Platinum prices can be influenced by various factors. These presumably include the value of the USD, as well as geopolitical instability, and economic tensions in major Platinum-producing countries. Changes in mining regulations in these countries and discoveries of Platinum mining sites can also play a role. Additionally, global economic growth, trends in jewellery, and demand from the automobile sector can contribute to Platinum price fluctuations. Wider industrial uses of Platinum, recycling methods, and trader sentiment can further impact its pricing.

Which industries are influenced the most by major changes in Platinum prices?

The industries most susceptible to swings in Platinum prices are those that rely heavily on the metal, such as the automotive, chemical, jewellery, and petroleum refining industries. Significant price fluctuations can possibly impact these sectors in three key ways: production costs, consumer behaviour, and the development of alternative materials.