Platinum – an overlooked metal that is rallying

Platinum has been largely ignored by the general market as gold has been recording new highs in the last year. However, in May this year platinum has started rallying. Let us see why this is happening and if this trend would continue in the future to come.

Platinum has been viewed as an alternative to palladium

Palladium used to be a highly popular investment thanks to its industrial use in cars’ catalytic converters that change harmful exhaust gases like carbon monoxide (CO) and unburnt hydrocarbons into less harmful CO2, water, and nitrogen. Platinum used to be viewed as an alternative to palladium, also in catalytic converters, albeit less suitable. However, some analysts used to say that the rise in demand for electric vehicles (EVs) limits the demand upside trend for catalytic converters used in traditional cars. At the same time, according to the World Platinum Investment Council, automotive platinum demand growth should continue in the next several years due to substitution of platinum for palladium in gasoline vehicles that are still actively bought by consumers. This can be seen from the chart below.

Source: World Platinum Investment Council

The growth trend, however, still remains quite moderate, in my view. So, the uptick in demand and the resulting price uptick happened for other reasons.

Platinum as an alternative to gold

After gold started rallying following Trump’s tariffs, geopolitical uncertainty and the Fed’s expected easing, investors started to buy other precious metals to take advantage of the rally. After all, some market players thought platinum was also an alternative to gold, a major hedge against inflation. In the 1970s there was a spike in demand for silver thanks to a surge in inflation, weak economic growth and also due to the Hunt brothers’ market speculations. The price spike was so dramatic that many individuals ran to sell their cutlery to take advantage of the prices. In other words, silver played the role of gold in the eyes of investors.

Silver prices adjusted for inflation

Source: Macrotrends

Platinum is also facing that demand uptick, it seems. As I am writing this, the precious metal is close to gold’s gains year-to-date.

Source: Trading Economics

This is even more surprising, given the fact that platinum has been trading sideways for a while.

The price surge could also be explained by the supply tightness of the platinum market, and also the demand for it as a popular precious metal in China.

Platinum as a precious metal used in jewelry

According to the World Platinum Investment Council, gold jewelry sales in China decreased by 32% in the 1 quarter of 2025 year-on-year due to the unprecedented price spike in the prices of the yellow metal.

Gold prices

Source: Goldprice.org

The demand for platinum jewelry, however, rose by 26% over the same time period. Supply disruptions, in turn, made the platinum market prices go up even more.

The platinum supply disruptions are mostly due to lower mine productivity. This made platinum’s global production total 5.77 million ounces, substantially below the yearly average for the period between 2010 and 2021. Indeed, the supply figures for 2025 are expected to be the lowest since 2020 during the disruptions caused by the Covid-19 pandemic. So, for this year the World Platinum Investment Council expects the deficit to be 966 koz, marking the third consecutive year of platinum deficit.

It is therefore expected that higher investment and jewelry demand, especially in China, would maintain the current platinum price growth. Moreover, greater expectations of Fed rate cuts, and the resulting weakening of the US dollar, will also positively impact platinum demand, which should lead to the metal’s price uptrend. But in my view, the future of platinum is quite uncertain.

 What will happen to platinum prices in the future?

As I have mentioned above, there are several factors affecting the price level. So, it is hard to say for sure what the price will be. To be objective in economics, we should consider one factor at a time. At the same time, it is likely monetary policies would stay loose in the near future, given the Fed’s dovish stance. This will lead to a weaker dollar, and higher demand for all precious metals. However, supply deficits come and go. The same is likely to happen to platinum this time. After all, there have already been three consecutive years of platinum deficits. So, it is uncertain when the platinum rally would end or at least lose some of its momentum.