Platinum supplies will be in surplus this year for the first time since 2022 as investors turn their back on the metal and Chinese jewelry demand weakens, the World Platinum Investment Council said.

The council shifted its 2026 market forecast to a slim surplus of 265,000 troy ounces. Earlier this year, it forecast a deficit of 297,000 ounces.

However, the platinum market remains fragile given its reliance on "exceptionally lean and increasingly illiquid" stocks, the council said.

Investors pulled back en masse from the precious metal in the first half of the year, with 234,000 ounces pulled from exchange-traded funds tracking platinum in the second quarter alone. Geopolitical tensions and economic uncertainty were behind the outflows, the council said.

Falling demand from Chinese jewelers amid weaker consumer appetite in the country also contributed to the surplus. Global jewelry demand for platinum is expected to decline by 15% on-year in 2026.

Platinum futures surged at the beginning of the year to top $2,900 an ounce in January amid a wider investor frenzy around precious metals, before pulling back sharply. The U.S.-Iran war in February accelerated the downturn in precious metals prices, as rising inflation and higher interest rates reduced the attractiveness of non-yielding assets like platinum.

The metal now trades around a third lower than its 2026 peak at $1,860 an ounce.

Investors are expected to extend their pullback from platinum over the last few months of the year, with the council forecasting net outflows from exchange-traded funds of 389,000 ounces.

In the longer term, demand for platinum will be underpinned by the rapid build-out of artificial intelligence, said Trevor Raymond, the council's chief executive. Demand from industrial groups for the metal is rising, offsetting a fall in demand from carmakers.

Supplies will grow by 2% as recycling of the metal improves, while the lack of investor desire to hold platinum will weigh on global demand. Total demand is forecast to fall 18% on-year to 7.09 million ounces, the council said.