Gold "Stagflation" = Platinum New High? Breaking the $1,300 barrier, platinum has risen 45% this year

"Gold fatigue" is giving rise to new safe-haven choices, with platinum becoming the new focus in the precious metals market.

On Wednesday, platinum prices broke through the $1,300 mark, reaching a nearly five-year high, with an annual increase of up to 44%. In comparison, gold prices have risen nearly 30% this year, but are currently consolidating below $3,400 per ounce, appearing somewhat weak.

Nicky Shiels, Head of Research and Metal Strategy at MKS PAMP, pointed out that the rise in platinum is a continuation of global currency devaluation trades:

"Investors are looking for dollar hedging tools, and beyond gold, silver and platinum have become the next hotspots."

Vaihab Agarwal, Head of Product Innovation at global index provider Indxx, referred to this phenomenon as "gold fatigue," where investors begin to seek opportunities downstream in the value chain after gold prices reach historical highs.

Currently, silver has attracted significant attention, with prices reaching a thirteen-year high above $36, while platinum is becoming the next beneficiary.

Structural Supply Shortage

According to the World Platinum Investment Council (WPIC), the platinum market is expected to experience a significant deficit for the third consecutive year in 2025, with a projected shortfall of 966,000 ounces, higher than the previous estimate of 848,000 ounces.

WPIC Research Director Edward Sterck stated, "The platinum market is in a structural deficit state," with existing above-ground stocks only able to support three months of demand. This deficit is expected to continue until 2029.

Meanwhile, Daniel Ghali, Senior Commodity Strategist at TD Securities, warned that the price squeeze caused by supply-demand imbalance is self-reinforcing:

"As prices rise, the inflow of physically-backed ETF funds further depletes market floating inventory, which may ultimately push the price discovery mechanism to raise the 'equilibrium point,' often exceeding market expectations."

Increased Demand in China's Jewelry Market

Automotive demand remains the main driver of the platinum market, accounting for 80% of global consumption. However, some analysts emphasize that as gold prices rise and begin to suppress gold demand, the platinum jewelry market is showing strong growth.

Robert Minter, Director of ETF Investment Strategy at Aberdeen Investments, pointed out that while gold, silver, and palladium all benefit from the impact of sustained fiscal spending in developed markets on the value of related currencies, platinum's performance is primarily driven by demand for platinum jewelry in China.

Bank of America analysts also noted that jewelry demand is the second-largest segment of the platinum market. The analyst indicated that after years of declining demand, there are signs that Chinese consumers' interest in platinum jewelry is rebounding.

"Considering the difference in market size, a 1% conversion from gold jewelry to platinum could add 700,000 ounces of demand, which would nearly double our deficit forecast to 1.6 million ounces." Data shows that China's gold and jewelry sales in the first quarter fell by 32% year-on-year, while platinum jewelry manufacturing grew by 26% year-on-year.

Value Trench or Bubble Eve?

Although the market is generally bullish on platinum, there are differing opinions.

Jeffrey Christian, Managing Director of CPM Group, recently stated that the platinum market is not as tight as it appears. He pointed out that if investment demand is excluded, the actual surplus in the platinum market in 2024 will be 26,000 ounces, and the surplus is expected to reach 329,000 ounces in 2025.

"The claim of a global platinum supply shortage is a misunderstanding."

Christian believes there is a "misunderstanding" because the methodology for commodity market research calculates market balance by subtracting manufacturing consumption demand from new supply, while investment demand is not included in manufacturing demand.

He stated, "Most commodity investment demand is 'secret', and estimating investment demand is extremely difficult and prone to error." In fact, global platinum inventory is substantial, and the fundamentals indicate an oversupply of platinum