Platinum Trades at Historic Discount to Gold and Palladium – Is It Time to Buy?

Platinum (XPL) is trading at one of the most significant discounts in history relative to gold (XAUUSD) and palladium (XPD). Key value ratios have dropped to levels last seen during previous turning points, triggering renewed interest from long-term investors. At the same time, platinum faces growing supply shortages, rising investment demand, and improving technical structures. Recent price and ratio breakouts support the case for a significant rotation into platinum. This article presents a comprehensive analysis of platinum’s fundamental and technical evaluation to understand the next move in the metal.

Platinum’s Price Divergence Widens Against Gold and Palladium

Platinum to Gold Ratio Near Historic Lows Signals Reversal Potential

Platinum continues to trade at a steep discount relative to gold and palladium. The platinum-to-gold ratio has shown a consistent decline since the 2008 highs. When the ratio hits a bottom, platinum prices tend to rise.

Historically, platinum was significantly undervalued in December 2008, December 2011, February 2016, March 2020, and April 2025. Notably, these timeframes also marked bottoming patterns in platinum prices. The RSI indicator shows momentum building near these lows, suggesting potential accumulation.

The undervaluation zone in the ratio indicates a bottom in platinum prices and overbought conditions in the gold market. This inverse relationship highlights platinum’s tendency to rebound strongly from periods of extreme undervaluation.

Recently, the ratio touched a low of 0.3, which triggered buying pressure. It has since rallied toward the 0.4–0.5 resistance zone, signalling a possible trend reversal. Moreover, the RSI also rebounds from the oversold levels.

This sharp rebound in the ratio suggests that platinum may have found a long-term bottom. It presents a compelling buying opportunity for investors looking to capitalise on historical mean reversion.

Breakout in Platinum to Palladium Ratio Points to Bullish Rotation Ahead

This divergence is also observed with palladium. The platinum-to-palladium ratio recently broke above the parity level of 1.0 and now trades near 1.2. This move follows a long period of underperformance that began in 2008, when platinum lost its historical premium over palladium.

The platinum-to-palladium ratio shows a strong bottom formation, suggesting a bullish price setup. Historically, the ratio formed a bottom between 2000 and 2001, then broke above the parity level in August 2001. This breakout triggered a strong rally in platinum prices relative to palladium, with the ratio eventually reaching a record high of 5.6 in March 2009.

After hitting a high in 2009, the ratio has steadily declined, reaching another bottom in 2020. From 2017 to 2024, the ratio consolidated near the lows, eventually breaking above the parity level again. This breakout signals the completion of a bottoming process and indicates that platinum is likely to outperform palladium in the coming months and years.

The current breakout above parity suggests the next resistance lies at 2.0. As long as the ratio trends toward this level, platinum prices may continue to rise relative to palladium.

A breakout above 2.0 would be a significant bullish signal. It could drive the ratio higher toward the following key resistance zones at 2.6 and 3.0, marking potential long-term targets.

These explanations show that platinum tends to be undervalued when the ratio falls below parity. The positive recovery above the parity level supports a potential valuation reset and presents a bullish outlook for platinum relative to palladium.

Platinum Fundamentals: Supply Deficits and Emerging Demand Catalysts

Persistent Supply Deficits Signal a Structurally Tight Platinum Market

The chart below shows platinum’s annual supply-demand balances from 2014 to 2025. From 2014 to 2016, the market faced large deficits, with 2014 hitting a shortfall of 810 koz. The surpluses followed from 2017 to 2018, peaking at 675 koz.

However, the trend reversed in 2019, and platinum has since struggled with repeated deficits. The shortfall reached a severe -809 koz in 2020 and deepened again from 2023 onward. The 2025 deficit is expected to be 966 koz, marking the third consecutive year of deep supply shortages.

This trend signals a tightening platinum market. Despite weak investment interest and sluggish demand in some sectors, platinum remains structurally undersupplied. Ongoing deficits may eventually support higher prices if investors shift attention to tightening fundamentals.

Moreover, the supply risks, such as declining mining output and falling recycling, add pressure. If demand stabilises or grows from new industrial uses, platinum could see a substantial upside driven by this imbalance.

Platinum Tariff Exemptions Ease Supply Fears Amid Shifting Demand Trends

Despite global macro uncertainty, platinum’s investment outlook remains resilient as it enters a third straight year of projected deficits. While US tariffs initially sparked fears of a supply shock, most platinum imports, mainly sponge and ingots, are exempt due to their classification as critical minerals. This exemption helped reduce lease rates and eased concerns about exchange stock depletion.

Global demand forecasts for platinum jewellery and automotive sectors have been downgraded, primarily due to a drop in Chinese gold jewellery demand and trade-driven price pressures. However, Indian and Chinese platinum jewellery demand is projected to rise in 2025. Overall, despite tariff-related headwinds, platinum’s limited domestic supply and strategic importance support its long-term investment case.

Q1 2025 Data Reveals Deepening Supply Constraints

Platinum supply dropped significantly in Q1 2025. Refined production fell to 1,108 koz, marking the lowest level in over a year. The total supply dropped to 1,458 koz, highlighting persistent structural issues in production and processing. The unchanged producer inventories suggest a limited buffer to absorb future disruptions. This supply contraction reinforces the broader thesis of sustained long-term deficits in the platinum market.

On the other hand, demand increased sharply. The total demand in Q1 2025 increased 10% year-on-year to 2,274 koz. The investment demand spiked due to strong inflows into US CME warehouses, triggered by tariff-driven arbitrage. However, automotive demand dropped from 784 koz to 753 koz as catalytic converter production slowed.

Moreover, the industrial demand also dropped significantly, from 673 koz to 527 koz, affected by weak glass demand and Japanese factory closures. The strong demand-supply imbalance further strengthens the case for a price recovery in platinum.

Platinum and Palladium Poised for Rallies on Bullish Patterns

Platinum’s Long-Term Cycles Reveal Bullish Breakout Potential

The long-term chart for platinum shows bullish price action historically, as shown in the yearly chart below. Platinum prices surged from the 1970s and reached a record high of $1,040 in 1980. That peak formed a bearish hammer candle in 1980, followed by a multi-year consolidation above the long-term trendline. Once this correction was over, the market formed a bottom at the long-term buy line and rallied sharply, supported by a broader precious metals boom in the 21st century, reaching another record high in 2008 at $2,299.

After peaking in 2008, platinum entered a prolonged correction and eventually bottomed in 2020 at $565.43. Since then, prices have shown renewed bullish momentum, signalling the early stages of a new uptrend. Historically, platinum tends to peak a few years after forming a bottom. This pattern was observed in the cycles ending in 1980 and 2008, suggesting that the next major top could emerge in the coming years.

The ongoing rebound from the long-term buy zone indicates strong upside potential. Given this favourable setup, investors may consider increasing exposure at current levels to capture the next phase of growth.

The quarterly chart for platinum shows that prices generated a strong buy signal in January 2020. The bullish consolidation from the 1980s to 2000 supports this momentum. The breakout above the long-term black trendline is significant and supports bullish price action.

Additionally, the formation of an inverted head and shoulders pattern after the 2020 buy signal supports the bullish case. The Q2 2025 candle shows strong upward momentum, indicating that the coming quarters could see further gains. Overall, platinum appears to be positioned for a multi-quarter rally, making it a strong buy for long-term investors.

Platinum New Growth Phase with Strong Upside Ahead

Platinum is currently trading within a new growth phase. Historically, each time platinum touches the long-term buy line, it initiates a strong upward trend. The first significant phase began in the early 1970s and peaked in the 1980s. The second phase started in 1999 and culminated in a record high in 2008.

Now, a third growth phase appears to have started. After forming an inverted head and shoulders pattern on the quarterly chart and generating a buy signal in March 2020, platinum has broken above the $1,300 level in Q2 2025. This breakout is expected to challenge and potentially surpass platinum’s historical record highs.

Palladium’s Bullish Setup Strengthens as Prices Return to Strategic Accumulation Zone

Palladium also presents a strong long-term buying opportunity, as shown in the monthly chart below. The price has historically formed strong bullish patterns and recently broke above the key long-term pivot zone. The consolidation between the $900 to $1,100 range, followed by the rally in Q3 2025, signals a new upward trend. This buy signal is supported by the historical cup pattern formed between 2001 and 2008, along with the V-shaped recoveries from the 2008 and 2016 lows.

The sharp correction from the 2022 record highs has brought prices back into the long-term pivot zone, reinforcing its significance as a strategic accumulation area for long-term investors. This $900–$1,100 region is widely regarded as a buying zone in Palladium. Recent June and July candles confirmed a strong rebound from this zone. However, the market is now correcting back into this zone to attract fresh buying interest.

Platinum Rallies as Dollar Peaks Mark Long-Term Turning Points

The chart below shows a long-term inverse relationship between platinum prices and the US Dollar Index. It is observed that when the US dollar peaked in 1985, 2002, and 2022, platinum formed major bottoms and began a strong upward rally.

These turning points are marked and coincide with the long-term support trendline for platinum, reinforcing its role as a buy zone. The recent rally in platinum from this support line shows similar bullish reversals from past cycles.

Moreover, the chart above also explains that the topping patterns in the US dollar in 2025 and 2022 resemble those seen in 2002 and 1985, which preceded significant declines. The introduction of global tariffs has weakened the US dollar. This weakness may trigger strong rallies in platinum.

Long-Term Divergence Among Precious Metals

The chart below shows a striking divergence in the long-term performance of platinum, gold, and palladium. Gold has steadily risen over the decades, hitting multiple all-time highs and currently trading well above platinum. On the other hand, palladium surged sharply after 2016, overtaking both gold and platinum to reach extreme highs near $3,000 before a steep correction. Meanwhile, platinum has lagged. It peaked in 2008 but failed to reclaim that level in subsequent years, trading at a significant discount to gold and palladium today.

This historical underperformance positions platinum and palladium as a compelling buy. The current platinum price remains far below its previous highs, while gold has already priced in much of its long-term bullish outlook.

Therefore, platinum is trading at a historic discount to gold and palladium. As supply deficits widen and investor attention returns, platinum offers more substantial mean-reversion potential.

Conclusion: Time to Rotate into Platinum?

Platinum trades at a historic discount to gold and palladium. The technical charts show strong bottom formations, while platinum to gold and palladium ratios trends suggest a shift in momentum. The previous instance of such divergence has led to significant platinum rallies.

Moreover, the fundamentals support the bullish outlook. The supply has tightened due to weak mine output and recycling. At the same time, demand is rising across the investment and jewellery segments. This imbalance supports higher prices.

Key bullish drivers include:

• Deep supply deficits for three consecutive years.
• Rising investment inflows driven by tariff-related arbitrage.
• Confirmed breakout patterns in price and ratio charts.
• Historical undervaluation of platinum relative to gold and palladium.
• Expected increase in Indian and Chinese jewellery demand in 2025.
• Continued downward trend in the US Dollar Index.

These factors build a strong investment case for platinum. Since the price has broken the key level of $1,300 in Q2 2025, this may be the ideal moment for long-term investors to rotate into the metal before the next major leg higher.