Due to gold volatility, China is buying platinum in bulk, with a significant shortage expected

Chinese traders are increasingly purchasing platinum as the price of gold becomes more volatile. Last month, Chinese imports of the rare earth metal rose to their highest level in a year. China is the largest consumer of platinum.

In April, a total of 11.5 tons of platinum were imported, according to data reported by Bloomberg. The global demand for the metal, which is also used in catalysts and laboratory equipment, is expected to exceed supply for the rest of this decade, according to analysts at Bloomberg Intelligence.

Jewelers are also switching to platinum products due to the volatility of gold prices. The extensive Shuibei market in Shenzhen, a major hub for jewelers with over 10,000 retailers, clearly reflects this change. The number of platinum traders in the market has tripled in the course of a month, says Yang Yang, deputy general manager at one of the largest traders in the market.

She notes that it is mainly goldsmiths who are now also using platinum in their workshops. 'Some gold workshops are trying to respond to the rising demand. But the transition is not easy, as the two metals require very different craftsmanship,' Yang explains.

The platinum market is meanwhile flooded by the enormous demand. Platinum manufacturers are overwhelmed, and retailers are facing unprecedented waiting times that have doubled, Yang tells Bloomberg.

The switch to platinum by workshops is also simply because gold has become too expensive for many consumers. In a year, its price has risen by a third, to $3,200 per troy ounce. Platinum, on the other hand, has fallen in value by 5% over the same period. A troy ounce of platinum costs around $1,000. 'Platinum has come to compensate for the risks and price fluctuations of gold,' says Deng Weibin, head of Asia-Pacific at the World Platinum Investment Council.