Why is platinum soaring?

The rare metal has jumped by 30% since the beginning of April, now approaching $1,300/ounce. Behind this surge, several fundamental factors are converging to support demand at a time when supply is becoming scarcer.

Platinum and palladium belong to the same family of metals (platinum group metals) and share many uses, for example in automotive catalysts. Long interchangeable, their market dynamics now diverge: palladium is used extensively in gasoline engines and is currently suffering from the rise of electric vehicles. This is increasing its surpluses. Conversely, platinum is supported by new uses such as hydrogen and the alternative possibilities it offers in jewelry. Supply is not keeping pace. According to the latest estimates from Bank of America, this deficit could reach up to 1.6 million ounces if jewelry demand continues to strengthen, particularly in China.

Hydrogen: a growth driver to watch

The development of PEM electrolysers – which produce hydrogen by breaking down water (H₂O) into hydrogen (H₂) and oxygen (O₂) – and fuel cells remains an important driver of future demand for platinum. These processes require platinum-rich catalysts to ensure the efficiency of electrochemical reactions. Over half of the electrolysis projects planned between now and 2030 are based on this technology. However, since the speculative bubble in 2020, the sector has been cleaned up. Several players have since found themselves in difficulty, such as France's McPhy, which is now in receivership. The future realization of these projects will depend on their industrial and financial viability.

Jewelry as additional support

The hydrogen argument concerns long-term trends. However, we are talking here about the progress made by platinum in recent weeks. This is where jewelry comes in, the second largest market for platinum after the automotive industry. Demand for platinum jewelry is growing in China. The rise in gold prices to new records ($3,350/ounce) is pushing jewelers to diversify. Bank of America analysts shed new light on this: a simple marginal shift of 1% of demand from gold to platinum would have an effect of 700 ounces of additional demand in an already tight market.

Finally, platinum's recent performance would undoubtedly not have been the same without the current context. Fears sparked by geopolitics and US trade strategy are prompting investors to diversify their risks. And thus to buy alternative assets to equities. Overall, all metals have risen in recent weeks. Gold is, of course, the most closely watched example.