A note released by Switzerland-based UBS suggests rising gold prices and subsequent noticeable drop in jewelry demand could spark new interest in platinum as a designer metal.
“According to a new report from Platinum Guild International (PGI), Chinese jewelry fabricators have begun increasing their platinum inventories, driven by the higher price of gold. Yet this boost in platinum fabrication comes at a time when both gold and platinum jewelry sales are in decline,” the note states.
Demand not quite there yet
Though jewelers are clearly expecting an increase in demand, the increase in platinum purchases has yet to hit the market.
“The overall demand for precious metal jewelry is falling in China, and platinum is no exception. In the second quarter of 2024, PGI’s affiliate partners reported a 17% year-on-year drop in platinum sales, a slight improvement from the 27% drop recorded in the first quarter. Despite this minor recovery, the long-term trend points to ongoing declines,” the note states.
China previously dominated global platinum jewelry consumption, but only accounted for 450,000 ounces of platinum last year, about 6% of worldwide consumption.
“This is a dramatic fall from the 2 million ounces consumed in 2014, when China represented a quarter of global platinum demand. Based on current trends, platinum jewellery demand in China is expected to drop further in 2024,” the note states.
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A good week
Platinum prices did rise more than 3% last week to more than $1,000 an ounce, a gain the UBS note attributed to the strengthening of the South African rand and a more favorable economic outlook for the BRICS member.
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