Platinum, as a precious metal, has a unique link to demand in the private market as jewelry. This is true for silver and gold, of course, but for platinum, the effect sometimes seems multiplied. Although China and India have extensive gold markets for jewelry, China is clearly the number one fan of platinum jewelry across the world—and when China moves, it has a material effect on the price of platinum.
As Reuters reports, “China's penchant for luxury platinum jewelry is fading despite lower global prices, leaving world demand for the metal exposed to sharper decline. China is by far the biggest market for platinum jewelry, making up more than 60 percent of global manufacturing use for the white metal in 2015. When broken down on a regional basis, Chinese jewelers are the biggest single consumers of platinum, buying 1.561 million ounces of the metal last year.”
If China is the global leader in platinum demand, and is seeing sharp decline in the demand for this precious metal, then it stands to reason that the price of platinum can free fall, as it did in late May. Now, however, one should turn their focus toward June and find out what may happen next.
If lax Chinese demand brought platinum down in May, we should look for this same variable and where it may go in June. To do that, try to get a gauge on the World Platinum Investment Council’s analysis of the global supply and demand of platinum. This may be considered something of a “Farmer’s almanac” for supply and demand, making predictions in the weather well ahead of the days the weather arrives, but it’s still worth taking into account. This report sees less demand, but also less supply, suggesting that platinum may not make any major moves for a while.