After the 2025 Surge, Platinum and Palladium Come Back Down to Earth: What’s Behind the Collapse
For platinum and palladium, 2025 was an extraordinary year. Platinum had gained roughly 90% since the second quarter, while palladium was up more than 80%. Prices had returned to levels not seen in years, driven by a combination of supply deficits, sanctions on Russian palladium, and expectations that the slowdown in the EV transition would extend the lifespan of internal combustion engines. It was a rally built on real fundamentals, but amplified by fear.
Today, most of those gains have largely evaporated. Platinum and palladium have fallen back to their lowest levels in the past five years. Gold, over the same period, has declined by roughly 4% — an ordinary correction after an exceptional rally. The gap between these performances has become so wide that it now appears anomalous even in a system designed to measure divergences: internal dispersion within the precious metals category has reached a z-score of nearly 10, meaning ten times the historical norm of the past five years. A situation that deserves closer examination.
What drove the 2025 rally — and why it deflated
Palladium and platinum are industrial metals with a very specific use case: they are primarily used in catalytic converters for combustion-engine vehicles, where they convert exhaust gases into less toxic substances. Estimates suggest that around 85–90% of palladium demand and roughly 40% of platinum demand come from the automotive sector.
In 2025, two factors significantly fueled the rally.
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