Platinum's 2025 increase exceeds 130%. After reaching a historic high, how should investors respond?

The platinum market in 2025 has experienced a remarkable rally. Spot prices not only surpassed the $2,200 per ounce level but also hit a record high of $2,381.25 at year-end. As a strategic industrial metal, why has platinum suddenly become a market focus? Is there a risk of chasing highs when entering now? These questions trouble many investors eager to seize this opportunity.

Long-term Opportunities for Platinum from Supply Challenges

The strong performance of platinum prices fundamentally stems from severe supply-side challenges. According to data from the World Platinum Investment Council (WPIC), the global platinum market has been in a structural deficit for three consecutive years.

South Africa, the world’s largest producer, saw a production decline of about 6.4% in 2025 due to power shortages, aging mines, and extreme weather impacts. Its dominance of over 70% of global output means that supply fluctuations directly influence the global market. The current gap is estimated at 500,000 to 700,000 ounces, with inventories at historic lows, supporting less than five months of consumption. This ongoing tightness on the supply side provides a solid price floor for platinum.

Deutsche Bank forecasts that in 2026, investment demand for platinum will rebound to 500,000 ounces, with the supply gap accounting for 13% of total supply. Meanwhile, the US Section 232 investigation has locked large amounts of stock in exchanges, further tightening spot supply.

Hydrogen Economy Becomes a New Demand Driver

Supply constraints are only part of the story. New demand opportunities are equally noteworthy.

2025 is regarded as the commercial debut of the hydrogen economy. As a key catalyst for proton exchange membrane (PEM) electrolyzers and fuel cells, platinum demand is rapidly growing alongside the expansion of global hydrogen infrastructure. The green hydrogen industry is expected to enter a phase of accelerated development in 2026, giving platinum a new strategic premium.

At the same time, policy relaxations regarding the EU’s ban on internal combustion engines by 2035 have led to a rebound in demand for hybrid vehicles, strengthening reliance on platinum catalytic converters in traditional automotive industries. This means platinum benefits from both the development of new energy industries and the continued demand from traditional sectors.

Price Comparison Effect and Capital Inflows

In the first half of 2025, gold and silver prices surged significantly, making platinum, which is relatively undervalued, a key target for risk-averse capital seeking to catch up. The Guangzhou Futures Exchange (GFEX) officially launched platinum and palladium futures contracts at year-end, greatly enhancing liquidity and speculative demand in the Asian market, further amplifying price volatility.

The start of a rate-cutting cycle lowered the opportunity cost of holding platinum, while geopolitical turmoil prompted countries to prioritize supply chain security. The US and other nations have included platinum on their critical mineral lists, reinforcing its dual role as a safe-haven asset and strategic reserve resource.

Historical Perspective: Long-term Evolution of Platinum Prices

The investment value of platinum did not appear out of nowhere. Historically, this market has experienced multiple major turning points:

In the late 1970s, increased demand for automotive catalytic converters first brought platinum into industrial focus. In the 1980s, political instability in South Africa caused supply disruptions, leading to price volatility. From 2000 to 2008, platinum saw significant rises, surpassing $2,000 per ounce in 2008.

Subsequent financial crises caused prices to plummet, but they gradually recovered. Between 2011 and 2015, slowing global growth and reduced Chinese demand again suppressed the market.

Starting in 2019, South Africa’s state power company faced debt issues, leading from sporadic outages to continuous rolling blackouts lasting months, paralyzing mining operations. The COVID-19 pandemic lockdowns and declining Chinese auto production further hit the platinum market.

From late 2020 to early 2021, the global economy restarted, automotive and other industries’ demand rebounded, and governments implemented loose stimulus measures, causing a strong rally in platinum prices. However, from mid-2021 to mid-2022, chip shortages hampered auto manufacturing, and increased capacity from mines in South Africa and Russia led to oversupply, causing prices to fall again.

By late 2022 to mid-2023, the market widely anticipated that China’s easing of pandemic controls would significantly boost platinum demand, boosting prices with optimism. From 2023 to mid-2025, although South African output remained constrained, concerns over recession driven by the Federal Reserve’s hawkish policies and insufficient Chinese economic recovery suppressed the rally. It was only after May 2025 that persistent global supply shortages, surging investment demand, and industrial applications sparked this strong upward trend.

Balancing Short-term Risks and Long-term Opportunities

Despite strong fundamentals, investors should not ignore short-term risks. Platinum has already accumulated substantial gains in the near term, and technical overbought conditions could trigger a correction. The market may enter a high-level consolidation phase, and blindly chasing prices could lead to short-term traps.

A rational investment strategy involves recognizing the existence of a long-term structural bull market while cautiously managing the risks of short-term corrections after price surges.

Platinum vs Palladium vs Gold: Key Differences

Different precious metals have distinct investment characteristics. Gold, as a safe-haven asset, tends to move inversely to stocks. During economic overheating, investors sell gold to buy stocks; during downturns, they buy gold for safety.

Platinum and palladium are industrial commodities, with values driven by supply and demand rather than investor sentiment. During the COVID crisis, both suffered more severe impacts due to industrial demand declines, with palladium exhibiting higher volatility.

Demand-wise, palladium is mainly used in gasoline vehicle catalytic converters and hybrids. Platinum is used in diesel vehicle catalysts, jewelry, and chemical catalysts. Gold relies on economic uncertainty, inflation expectations, and central bank purchases.

In terms of supply characteristics, palladium’s annual production is less than 0.5% of gold’s, with over 80% produced in Russia and South Africa, and inventories continuously declining. Platinum’s output is scarce, with over 70% from South Africa, and supply is highly sensitive to policy changes. Gold reserves are relatively abundant, with stable supply.

Under current conditions, platinum’s industrial nature and supply scarcity create unique investment opportunities but also imply higher volatility.

How to Participate in the Platinum Investment Market

For retail investors, there are various ways to participate in platinum markets, each with pros and cons:

Physical platinum investment involves purchasing and holding actual metal, but entails sales taxes, insurance, and storage costs. Compared to gold, platinum’s casting and manufacturing costs are higher, and premiums are relatively larger.

Platinum ETF index funds avoid physical-related taxes and fees; investors only pay low management fees but do not own the physical metal.

Platinum futures are standardized exchange contracts allowing investors to lock in future prices and buy or sell at a fixed price at a specified date. This method provides price discovery but requires understanding futures trading rules.

Platinum CFD contracts are more flexible trading instruments. Investors can trade contracts with trading platforms, gaining profit from price differences without physical delivery. CFDs offer low transaction costs, support for both long and short positions, and require less margin for large trades. However, high leverage also means potential for amplified losses, increasing risk.

Different investors should choose tools based on their risk tolerance, capital size, and trading experience.

Summary: Core Considerations for Platinum Investment

Platinum investment is relatively new, with a small but professional participant base. Unlike gold and silver, which attract retail investors, platinum investors tend to base decisions on technical analysis and supply-demand fundamentals, with stronger risk awareness.

Successful platinum investing requires understanding three levels: first, the global supply landscape and South Africa’s capacity bottlenecks; second, the long-term prospects of emerging demand like the hydrogen economy; third, the risk-reward implied by current valuations.

Currently, the platinum market is characterized by tight supply and promising demand outlooks, but the recent rally is already substantial. Investors should avoid blindly chasing highs and instead develop strategies aligned with their risk preferences and time horizons—maintaining a long-term bullish view on fundamentals while cautiously managing short-term technical corrections.