Gold Pauses as Platinum Steals the Spotlight with 45% Gain

Despite gold’s impressive 30% rally this year, its market has entered a consolidation phase, hovering below the $3,400-per-ounce mark. In contrast, the broader precious metals scene is witnessing striking developments – notably in platinum.

Platinum futures have broken through the critical $1,300-per-ounce level, reaching a near five-year high and recording a year-to-date increase of 45%. Over the past three weeks, platinum has steadily overrun former resistance levels of $1,000 and $1,200, shattering the long-held trading range of $900–$1,100.

According to the latest report by the World Platinum Investment Council (WPIC), the global platinum shortage is projected to climb to 966,000 ounces in 2025 — marking the third consecutive year of undersupply. With 2023 and 2024 shortages estimated at 896,000 and 922,000 ounces respectively, physical stockpiles are expected to dip to 2.5 million ounces in 2025. This inventory level may only cover 2 to 3 years of consumption.

Key Drivers Behind the Market Dynamics

Deepening Supply Crisis

Production Challenges in South Africa: South Africa supplies around 80% of the world’s platinum. However, ongoing electrical power problems are increasingly hindering production. In 2023, the country experienced 91 cumulative days of power outages, and early 2024 saw an additional loss of 3,600 megawatts due to power generator failures.

Stalled Mine Development: With platinum’s rarity — the gold-to-platinum production ratio stands at approximately 18:1 — securing new mining projects becomes a decade-long prospect. The CEO of Impala Platinum Holdings has pointed out that current price levels are insufficient to attract fresh investments in new mines.

Shifting Demand Landscape

Automotive Demand: Accounting for 80% of total platinum demand, the automotive sector is rebounding. Demand is forecast to reach 3.25 million ounces in 2025, setting an eight-year record. A resurgence in internal combustion engine sales — partly due to adjustments in EV subsidies — means that a mere 1% drop in electric vehicle market share could catapult platinum demand by 25,000 ounces according to WPIC estimates.

Cosmetic and Jewelry Appeal: A noticeable trend is emerging as Chinese consumers begin shifting from gold to platinum jewelry. Analysis from Bank of America suggests that if just 1% of gold jewelry demand transfers to platinum, an extra 700,000 ounces of platinum would be needed – effectively doubling the current shortage to 1.6 million ounces.

Investment Flow: Investment demand for platinum is projected to hit 688,000 ounces in 2025. However, TD Securities warns that ongoing ETF accumulation could drain the available free float, potentially triggering severe price volatility.

Expert Opinions

Industry analysts have varied perspectives on this dynamic market:

Nicky Shiels of MKS PAMP describes the platinum rally as an extension of global currency devaluation trading, with investors increasingly looking for alternatives beyond traditional gold to hedge against a weakening dollar.

Shree Kargutkar from Sprott Asset Management emphasizes that the rapid consumption of inventory is a sign of a solid upward trend. Nonetheless, he cautions that 2025 might still experience turbulence due to U.S. tariffs and shifting trade policies.

Meanwhile, TD Securities’ Daniel Ghali notes that the ongoing supply crunch is creating a self-reinforcing cycle of price hikes. He highlights that the balance achieved in price discovery might drive the eventual equilibrium well above current forecasts.

Investment Caution：While fundamental factors seem poised to push prices higher, platinum remains far more volatile than gold. Reports from Sprott indicate that any slowdown in inventory depletion or an increase in recycled metal supply could temper the bullish sentiment. Investors are advised to closely monitor developments in South Africa’s power infrastructure and any changes in U.S. trade policy.