UBS has again increased its platinum price forecast, anticipating a price of $2,500 an ounce in the coming months. This comes after the metal's price doubled in the past seven months. The bank attributes the rally to strong investment demand and tight physical market conditions, despite industrial and jewelry demand playing a role.

Several macro factors support the price surge, including expectations of lower U.S. interest rates and geopolitical tensions. Strategists highlighted platinum's relatively small market, with annual consumption around 250 metric tons, compared to gold's 5,000 metric tons, as a key factor amplifying price movements. This makes it more sensitive to investor actions.

UBS analysts Giovanni Staunovo and Wayne Gordon pointed out that the surge isn't yet fully reflected in exchange-traded fund holdings or futures positioning. They also noted potential demand from China following the launch of physical platinum futures. However, they caution about potential volatility due to the metal's small market size.

While the near-term outlook is bullish, UBS warns that potential price swings could occur. Further gains will depend on continued strong investment demand and the pace at which mine supply responds to higher prices. Investors should watch the upcoming quarterly update from the World Platinum Investment Council for further insights.