On August 6th, platinum group metals continued their upward momentum from the previous day. By the market close, the platinum futures 2610 contract had risen 0.69% to 433.5 yuan per gram, while the palladium futures 2610 contract advanced 1.13% to 325.75 yuan per gram.
Some analysts believe the recent price surge in platinum group metals is primarily driven by macroeconomic news, with its sustainability remaining uncertain. “Currently, we have not observed any material changes in the supply-demand dynamics for platinum and palladium. The price increase is more about heightened bullish sentiment fueled by macro news,” said Wang Rong, chief analyst at Guotai Junan Futures. “The geopolitical situation in the Middle East has temporarily eased, with both the US and Iran signaling negotiations. This has rapidly cooled market panic and shifted focus to pricing in the expectation of improved navigation through the Strait of Hormuz.” Wang noted that the Strait of Hormuz, as a critical global energy and commodity logistics channel, had been under pressure from geopolitical disruptions that weighed on global risk appetite. If the risk of conflict spillover subsides, the geopolitical risk premium could quickly recede, allowing risk assets to regain favor with capital. A broad-based rally in the metals sector would further boost platinum and palladium prices.
Wang cautioned that current expectations for Strait of Hormuz navigation are purely speculative, as related diplomatic statements have not yet translated into actual policy changes. Geopolitical uncertainties remain. Additionally, Sun Fangfang, an analyst at Guoxin Futures, pointed out that joint intervention by the US and Japan in the yen exchange rate helped curb excessive depreciation risks. “South Korean regulators cooled leveraged products, and after a sharp decline, tech stocks stabilized, improving market risk appetite,” Sun said. She noted that while the Federal Reserve held rates steady in July, internal divisions have widened. On August 5th, weaker-than-expected ADP employment data, a drop in oil prices, and easing inflation concerns prompted markets to expect only one rate hike or even none by year-end. The US dollar index fell below 100. In this environment, bullish sentiment was bolstered, with investors buying at low levels, gradually restoring liquidity in platinum and palladium.
“Cost support for platinum group metals is also strong. South Africa and Russia together account for over 80% of global production. The fully loaded cash costs for mines in these regions typically range from $1,000 to $1,200 per ounce,” Sun said. “As NYMEX palladium prices retraced to $1,156 per ounce, cost support became evident, with little room for further declines. This prompted short covering, providing price support.”
Looking ahead, Wang believes the current fundamentals for platinum and palladium remain weak, with no consistent positive signals from high-frequency data. Future pricing will rely more on macroeconomic news and market sentiment. Sun argues that the US economy is currently trapped in an “impossible trinity” of growth, inflation, and fiscal sustainability, which will directly hinder the Fed’s ability to raise rates. “Platinum and palladium prices have already undergone a full correction, with strong cost support and room for resource premiums. A bottoming and rebound scenario can be viewed as likely,” Sun said. “The pace of the rebound will depend on macro news catalysts, and investors should be wary of the ‘TACO’ trade’s potential for periodic pullback pressure.”