Platinum, often overshadowed by gold, is experiencing a significant shift in its market dynamics. This precious metal is facing a supply deficit, which is expected to continue for several years. The World Platinum Investment Council predicts that newly mined platinum output will decrease by 6% in 2025, reversing the growth seen in previous years. This reduction, combined with limited recycling and no major new mines, is capping supply growth despite rising prices.
The demand for platinum is surging across various sectors, including automotive, jewelry, industrial, and investment. Notably, there is significant growth in Chinese jewelry demand and investor interest. This surge in demand, coupled with constrained supply, is leading to a persistent deficit in the platinum market. The deficit is projected to average around 727,000 ounces annually from 2025 to 2029, representing about 9% of average demand.
Above-ground stocks of platinum are projected to dwindle to critically low levels, which could trigger a significant price increase. The market is facing its third consecutive year of major supply deficits, threatening to deplete inventories within a few years. This situation sets the stage for a potentially sustained price surge.
Investors are taking notice of platinum’s potential as it gains momentum. The price has increased by about a third year-to-date, driven by entrenched market deficits and emerging demand growth. Despite economic uncertainty, platinum’s appeal is growing, particularly as investors seek alternatives to traditional assets like gold. With its unique combination of supply constraints and rising demand, platinum may be nearing a tipping point that could propel its price to new heights.
Platinum price forecasts suggest that it could reach $1,400 by mid-2025 and $1,500 by mid-2026. These predictions are based on the ongoing supply deficits and the increasing demand from various sectors. As the market continues to face challenges in meeting demand, investors are likely to see platinum as a valuable addition to their portfolios.