Investors Seek Gold Alternative - Platinum Hits $1,400 As Supply Deficit Deepens

Platinum prices have surged to their highest levels since 2014, driven by tightening supply, speculative investor flows, and a wave of buyers turning to the metal as a cheaper alternative to gold.

The precious metal climbed as high as $1,435 per ounce in the Asian trading session on Friday before taking a breather in the rally that gained over 50% from the April lows.

A key catalyst behind the rally is a deepening supply deficit. The World Platinum Investment Council (WPIC) recently noted that the platinum market is expected to record a deficit of 966 koz this year, followed by 992 koz and 896 koz in 2024 and 2023, respectively.

Also Read: Platinum Rallies To 4-Year High: Is $1,200 Just The Start?

"On the supply side, mine production remains at multi-year lows, while recycling has failed to rebound to pre-pandemic levels, " Edward Sterck, WPIC's Director of Research, said in the report published on June 18.

Sterck noted that demand, while down 4% year-on-year due to lower industrial glass demand, remains resilient. "Jewelry and investment demand are outperforming expectations, with bar and coin sales in China in particular showing strong momentum," he added.

Much of the current demand boom is being driven by jewelry and technological applications. In China, gold jewelry sales plummeted 32% in the first quarter, while platinum jewelry fabrication rose by 26% as consumers sought a more affordable alternative. Retailers responded by boosting their platinum inventories.

Technology-driven demand is also a factor, as platinum (traditionally a component of catalyst converter metals for internal combustion engines) plays a crucial role in hydrogen energy systems, particularly in proton exchange membrane electrolyzers.

Another factor driving platinum's momentum is its growing role as a "gold alternative." With gold trading at historic highs above $3,000 an ounce and institutions like Goldman Sachs seeing a further rise to $3,700 by the end of 2025, platinum remains notably undervalued in comparison.

This widening price gap between the two metals has made platinum an increasingly attractive option for investors seeking exposure to precious metals without paying gold's premium.

"Gold has almost doubled in two years," Nicky Shiels of MKS Pamp said according to the Financial Times, "and this is the next iteration of that trade—investors are asking ‘what's next?' and platinum is answering that call."

Looking ahead, analysts expect the bullish trend in platinum to persist. WPIC forecasts continued deficits through 2029, citing structural weaknesses in supply and growing industrial and investment demand. With visible above-ground stocks declining and no significant recovery in mine production anticipated soon, the fundamentals suggest further price upside.

Price Watch: Valterra Platinum AGPPF closed at $45.41. The stock is up nearly 45% year-to-date.

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