Platinum and Palladium Diverge: Supply Dynamics to Drive 2026 Price Paths

The precious metals landscape in 2025 has delivered starkly different returns for platinum and palladium, though both have ridden the coattails of gold’s impressive rally. Yet their trajectories are set to diverge sharply as we move into 2026, driven by contrasting supply-demand fundamentals that will ultimately determine investor outcomes.

Performance Gap Widens Between the Two Metals

Platinum has emerged as the clear winner through mid-2025, with prices surging 90 percent from the year’s start to reach US$1,725 per ounce in October—a level unseen in over a decade. Despite recent pullbacks to the US$1,600 range, the metal maintains multi-year strength. Palladium, by comparison, has posted an 80 percent gain to hit US$1,630 per ounce but trails platinum in momentum, currently hovering near US$1,430.

The divergence reflects more than just investor sentiment. While both metals benefit from gold’s safe-haven appeal, their underlying market mechanics tell fundamentally different stories. Platinum commands stronger fundamentals anchored in structural supply constraints, whereas palladium faces a tightening surplus that threatens to cap further upside.

The Platinum Supply Story: Deficits Keep Driving Prices Higher

Platinum’s price resilience stems from a persistent supply crisis that shows no signs of abating. According to Metals Focus analysis, the platinum market is forecast to post a third consecutive physical deficit for 2025, totaling 415,000 ounces as mine output declines 6 percent year-on-year. This supply squeeze is compounded by operational headwinds in key producing regions—Southern Africa faces production disruptions from outages and heavy rainfall, while North America undergoes significant restructuring.

The supply deficit narrative intensifies for 2026. Metals Focus projects the shortfall will widen to 480,000 ounces as mine supply contracts another 2 percent to reach a 12-year low (excluding the 2020 pandemic trough). Behind this contraction lies a more troubling trend: chronic underinvestment has left few new projects in the pipeline. “With years of capex restraint creating structural mine decline, the market faces long-term supply challenges,” analysts note.

Demand Dynamics Add Further Support

On the demand side, platinum is experiencing genuine growth drivers. Jewelry fabrication has surged in China as consumers shift away from increasingly expensive gold to platinum’s more affordable price point. Investment flows into platinum exchange-traded products in China and the US have also accelerated, providing additional support to prices. The industrial sector is expected to post modest 1 percent demand growth in 2026, primarily from renewed glass and chemical sector activity out of China.

However, automotive sector weakness poses a headwind. The ongoing transition to electrification, though slower than previously anticipated, continues to erode platinum catalytic converter demand as manufacturers increasingly substitute cheaper palladium alternatives.

The Palladium Conundrum: Surplus Looms Despite Current Deficit

Palladium presents a more complicated investment case. While the metal currently trades at only two-year highs—far below platinum’s 12-year peaks—the market mechanics suggest limited upside ahead. The palladium market has operated in deficit territory for several years, but that gap is rapidly closing. The 2024 deficit of 566,000 ounces is projected to shrink to 367,000 ounces in 2025 and further contract to just 178,000 ounces in 2026.

The tightening deficit reflects competing trends. Mine supply, plagued by the same structural issues affecting platinum, is expected to fall 3 percent in 2026. Yet secondary supply—predominantly recycled material—is projected to expand by 10 percent as recovery activity accelerates. This recycling surge will result in total supply actually growing 1 percent despite production declines.

Demand destruction adds to the bearish case. Palladium consumption is set to contract over 1 percent in 2026, driven primarily by automotive sector pullback as vehicles shift toward electrification and manufacturers explore palladium alternatives in catalytic converter formulations.

2026 Price Forecasts: Platinum Rallies, Palladium Retreats

The supply-demand imbalances point to sharply divergent price trajectories. Metals Focus is forecasting platinum to average US$1,670 per ounce in 2026—a 34 percent increase year-over-year—as the persistent deficit continues supporting prices at elevated levels.

Palladium faces a more pessimistic outlook. The firm projects Q4 2025 prices averaging US$1,350 per ounce, declining to US$1,150 by Q4 2026 as the deficit compression and demand weakness take hold.

Investment Implications: Quality of Fundamentals Matters

For 2026, platinum and palladium demonstrate a critical lesson in precious metals investing: not all precious metals trade in tandem. While both qualify as precious metals through their rarity and jewelry applications, industrial demand dominates their price drivers—making supply-demand fundamentals the paramount consideration.

Platinum’s structural supply deficit, coupled with emerging demand catalysts in China’s jewelry and investment markets, positions the metal to continue benefiting from gold’s broader precious metals rally. The mathematics are straightforward: persistent shortages in a market with limited new supply entering production create a bullish foundation.

Palladium, conversely, faces headwinds from a narrowing deficit and emerging supply surplus as recycling ramps up. Without structural supply support, the metal appears vulnerable despite current price strength. Investors seeking precious metals exposure in 2026 should closely monitor which metals offer fundamental supply-demand tailwinds versus those facing structural challenges.