After years of relative quiet, platinum has made a stunning comeback to center stage this year with an extraordinary surge in price. According to data from Wind Information, on December 19, spot platinum prices climbed as high as $1,987 per ounce during trading hours, reaching a new high since late July 2008. Although platinum’s current price is still less than half that of gold (London gold spot, the same hereafter), its year-to-date gain has far outpaced gold’s—so far this year, platinum’s price has risen by over 110%, while gold’s price has increased by roughly 65% over the same period.

In the author’s view, the core factor driving the rise in platinum prices is the shift in both supply and demand.

On the one hand, there’s a contraction on the supply side. As the world’s core platinum-producing region, accounting for over 70% of global output, South Africa’s platinum mining industry is grappling with a host of challenges—including aging ore bodies, power shortages, and extreme weather conditions—severely limiting its production capacity. According to forecast data released in November by the World Platinum Investment Council (WPIC), the platinum market is expected to experience a significant shortage for the third consecutive year this year, with the projected shortfall reaching 22 tons.

On the other hand, there’s the growth on the demand side. Platinum group metals have long been known as “industrial vitamins.” In the global wave of green transformation, platinum’s industrial attributes have been endowed with new value, making it an irreplaceable and critical player in green energy sectors such as hydrogen energy, electrolytic hydrogen production, and fuel cells. It is precisely the convergence of this industrial demand and the demand driven by the green transition that has enabled platinum to break free from the traditional pricing framework for precious metals, giving rise to a unique industry-driven logic.

The “substitution effect” triggered by soaring gold prices is equally worth noting. Since the beginning of this year, gold prices have been steadily rising, reaching a historic high of $4,381.484 per ounce in October. Consequently, prices for gold jewelry and gold bars have also risen accordingly. Against this backdrop, platinum—offering better value for money—has become an attractive alternative for many consumers and investors, leading to a significant increase in demand.

Data released by the World Platinum Investment Council also confirms this trend: in 2025, demand for platinum jewelry is expected to rise by 7% year-on-year to 67 tons—the highest level since 2018; investment demand is forecast to increase by 6% year-on-year to 23 tons. Notably, the Chinese market has become the key driver of demand for platinum bars and coins—total demand for platinum bars and coins in 2025 is projected to climb by 47% year-on-year to 16 tons, reaching a four-year high, with the Chinese market accounting for 13 tons of that total.

Moreover, platinum’s financial attributes also provide strong support for its price. At the domestic level, platinum and palladium futures have recently been officially listed and started trading on the Guangzhou Futures Exchange. This not only fills the gap in domestically traded platinum and palladium derivatives but also helps enhance China’s international influence and pricing power in the global platinum-group metals industry. On the international front, with the Federal Reserve initiating a rate-cutting cycle, expectations of looser liquidity have significantly reduced the holding costs of precious metals, prompting capital to rotate within the precious metals sector—from gold and silver, which currently command higher valuations, toward platinum, which remains relatively undervalued.

Experts interviewed by the author generally believe that the strong upward trend in platinum is likely to continue. On the one hand, the tight supply-demand situation for platinum is unlikely to improve in the short term, and as the hydrogen energy industry continues to develop, industrial demand for platinum will further expand, potentially widening the supply-demand gap even further. On the other hand, driven by the logic of investors seeking cost-effective assets, platinum’s valuation advantage relative to gold may continue to attract more capital inflows. (Securities Daily)