UBS Global Research Maintains Cautiously Optimistic Outlook on Platinum with $1,100/oz Target Price by Mid-2025
UBS Global Research has recently released a note maintaining a cautiously optimistic outlook on platinum, with a target price of $1,100/oz by mid-2025. Despite current challenging market conditions, the note highlights factors that could support this price target in the coming year.
One of the key drivers behind this outlook is the expectation of the U.S. Federal Reserve beginning an easing cycle soon. Lower interest rates are predicted to provide support for real assets, including platinum. However, analysts at UBS anticipate that platinum may lag behind gold until lower rates stimulate stronger industrial activity.
For investors with a high-risk tolerance, UBS recommends managing downside price risks associated with platinum due to its volatile nature. While the long-term outlook is modestly positive, caution is advised given the current market conditions.
China's platinum imports have been robust, with over 59 metric tons imported in the first half of 2024, surpassing the previous record of 53 metric tons in 2021. Despite this, weaker imports in June suggest potential short-term demand fluctuations.
The decline in platinum jewelry demand in China is attributed to the metal losing its status as the most prestigious jewelry material, with consumers showing a preference for gold. The shift in demand towards the glass industry reflects evolving consumer preferences and industrial requirements.
UBS has revised its platinum price forecasts for December 2024 and March 2025 downward by USD 25/oz due to challenges such as reduced car production and changing consumer preferences.
Analysis:
In summary, UBS Global Research is cautiously optimistic about platinum, forecasting a target price of $1,100/oz by mid-2025. Factors such as the U.S. Federal Reserve's easing cycle and robust Chinese imports have the potential to support platinum prices. However, challenges like declining jewelry demand and reduced car production in China may impact the metal's performance. Investors are advised to manage downside risks and remain cautious in light of the current market conditions.