Platinum price analysis: here’s why it has pulled back

Platinum price has been on a steady uptrend in recent months as heightened demand and a supply deficit shape the market. Over the past three months, the precious metal has rallied by over 60% and 17% since mid-June. 

However, while the supply deficit is expected to continue offering steady support to the platinum price in the short term, a corrective pullback appears imminent. In fact, the profit-taking mode has seen it drop by close to 5% at $1,400 earlier on Tuesday. This is after surging to a fresh 11-year high of $1,466.05 on Friday last week.

Platinum bulls’ puff fades 

Platinum price is trading in the red for the first time after recording six consecutive weeks of gains. Prior to that winning streak, the precious metal had largely been range-bound between $865 and $1,100 since mid-2021. 

The end of this consolidation phase highlighted platinum as being undervalued fundamentally; an aspect that started its months-long rally. Besides, investors shifted their focus from the more expensive and volatile gold to the more affordable platinum as geopolitical and economic uncertainties bolstered safe haven demand. 

Additionally, Chinese exports fueled the precious metal’s supply deficit as gold’s historic rally heightened platinum jewelry demand. According to the World Platinum Investment Council (WPIC), China’s platinum jewelry demand is expected to increase by 15% in 2025 year-on-year. 

Nonetheless, the metal’s total demand is forecast to drop by 4% in 2025 YoY. This figure matches the expected 4% decline in platinum’s total supply as highlighted by WPIC in its Q1’25 report. 

While the platinum price uptrend will likely continue in the short term, investors will need to see higher demand from China or a deeper supply deficit to sustain the 11-year high hit late last week. The data slated for release later in the month will likely show a decline in China’s platinum imports after aggressive buying in May and June. 

In regards to concerns over Trump’s aggressive tariffs, platinum price may continue to find some support in its safe haven appeal. However, surge in import levies will likely be counterintuitive; further weighing on its demand outlook. Besides, mining output in South Africa, the leading producer of the precious metal, is set to improve in the year’s second half. 

The market will also be tracking the market sentiment in relation to the returning demand for hybrid vehicles. Currently, the price spread between platinum and palladium is below 15%. If it widens to above 30%, catalyst manufacturers may opt for palladium; a move that would be bearish for platinum prices.   

Platinum price technical analysis

WPIC’s Q1’25 report forecast that the platinum market is in its third consecutive year of supply deficit. Following a 4% decline, the total supply is set to be the lowest in 5 years. While its demand is set to ease, prices are expected to stabilize above levels prior to the recent rally. 

In the short term, platinum price may trade within the range of between $1,435 and $1,350 as the bulls strive to defend the support level along the 20-day EMA. Even with further easing, I expect it to hold steady above the previously strong resistance zone of $1,250.