Platinum and Palladium Prices Surge but Remain Deeply Discounted to Gold

Platinum and Palladium Prices Surge but Remain Deeply Discounted to Gold

Short-term rally driven by market sentiment and supply concerns, Commerzbank warns of possible correction

Platinum and Palladium prices experienced a notable surge this week, driven by investor sentiment and persistent supply deficit forecasts, according to Carsten Fritsch, commodity analyst at Commerzbank.

Platinum prices rose by 5.6% on Tuesday alone, climbing further on Wednesday to reach nearly a one-year high at $1,090 per troy ounce. Palladium followed suit, jumping approximately 8% to over $1,055 per troy ounce, marking its highest level in three and a half months.

Fritsch highlights that recent projections by various analysts suggest continued supply deficits in the platinum group metals (PGM) market. “In all but one case, the new estimates point to ongoing supply shortfalls,” he said. However, he questions whether this justifies the sharp price increases.

“Demand for these metals is expected to decline, in some regions quite significantly. So these predictions don’t necessarily explain the price explosion. Perhaps the market simply latched onto them,” he noted. He emphasized the massive valuation gap compared to Gold, where both Platinum and Palladium are trading at a discount of over $2,200 and a price ratio exceeding 3:1.

Despite the strong rally, Fritsch remains cautious. “We’ve seen similar price spikes in recent months—like in May and October 2024—but they were quickly corrected,” he said. “Without a clear improvement in geopolitical and tariff-related uncertainty, it’s unlikely Platinum and Palladium will sustain these gains or close the gap with Gold in the long term.”

Analysts will be watching closely to see if this rally proves to be another short-term swing or the start of a broader trend in the precious metals market.