Platinum, Silver Hit Record Highs on Supply Shock, Auto Demand
A potent mix of chronic supply deficits, shifting EU auto policy, and hopes for Fed rate cuts have ignited a broad rally across precious and industrial metals.
Platinum and silver prices surged to all-time highs Friday, leading a blistering rally across the precious and industrial metals complex as investors reacted to a powerful combination of persistent supply shortages and a landmark reversal in European automotive policy.
Platinum surged approximately 8% to a record peak of $2,429 per ounce, while silver breached the $75 level for the first time in history. Palladium, a sister metal to platinum, joined the rally with a staggering 11% gain, marking a three-year high. The moves reflect a market grappling with deep structural deficits just as key sources of demand receive an unexpected new lease on life.
A primary catalyst for the surge in platinum group metals (PGMs) was news that the European Union is reconsidering its planned 2035 ban on new internal combustion engine (ICE) vehicles. According to reports from Investing.com, this potential policy pivot has dramatically altered the demand forecast for both platinum and palladium, which are essential components in automotive catalytic converters used to control emissions.
The auto sector accounts for about 80% of palladium demand and a significant portion of platinum consumption. While the long-term rise of electric vehicles—which do not use these metals in their powertrains—has been a headwind, the revised EU outlook suggests demand for emission-control devices will remain robust for far longer than previously anticipated.
Compounding the demand-side surprise are severe and ongoing supply constraints. The platinum market is facing its third consecutive annual supply deficit, a fact exacerbated by its geographic concentration. South Africa, which accounts for over 70% of global platinum mine output, has been plagued by operational disruptions and logistical challenges, throttling supply to a market that is already tight.
Palladium faces its own geopolitical supply risks, with a large portion of global production originating in Russia. Concerns over supply reliability have been a persistent feature in the market, adding a risk premium to prices.
The rally is not confined to industrial-use metals. Silver's ascent to a record high of over $76 an ounce highlights the dual-role it plays as both an industrial metal and a monetary hedge. The precious metals sector as a whole has been buoyed by growing expectations that the Federal Reserve will move to cut interest rates, which would weaken the U.S. dollar and increase the appeal of non-yielding assets like gold and silver.
Silver is also experiencing its own supply and demand pressures, with analysts pointing to a fifth consecutive year of a structural supply deficit. Its critical role in solar panel and electric vehicle manufacturing provides a strong, long-term demand floor, while investors simultaneously seek it out as a hedge against inflation and economic uncertainty.
As the week closed, the message from the market was clear: a confluence of powerful macroeconomic trends and sector-specific supply shocks has created a new bullish paradigm for precious and industrial metals, forcing a significant repricing across the complex.