By
Bloomberg
Published
December 18, 2025
Platinum extended its strong rally to a 17-year high, boosted by tight supplies and elevated trading activity in a new Chinese futures contract.
Spot prices rose as much as 4.9% on Wednesday and have posted gains of more than 2% each day since Thursday. The metal has more than doubled this year, marking the biggest annual gain according to Bloomberg data since 1987.
The rise came as the London market shows signs of tightening, as banks park metal in the United States to insure against the risk of tariffs. Exports to China have also been strong this year, and optimism about the country's demand has been reinforced when futures recently began trading on the Guangzhou Futures Exchange.
Highlighting the supply shortage, the annualized cost of borrowing platinum for a month was around 14% on Wednesday in London, a historically high level that indicates traders are unwilling to part with the metal while inventories are low.
“We have a really tight environment globally, with a three-way geographic competition for metal between the United States, Europe and China,” said Ed Sterck, director of research at the World Platinum Investment Council. “There are still very high leasing rates, which indicates a shortage of metal.”
In a tense context, the metal has been affected by a wave of investments that poured into precious metals this year, an avalanche that helped silver also double its price and soar to a record.
As traders await the outcome of Washington's Section 232 investigation, which could lead to tariffs or trade restrictions on platinum, more than 600,000 ounces of the metal sit in U.S. warehouses, a much larger amount than usual.
In China, the recently launched platinum futures on GFEX have attracted a wave of speculators, with prices well above other international benchmarks.
While Sterck said trading volumes for the new offering were significant, he noted that the contract was not yet fully open for foreign traders to take advantage of higher prices by shipping platinum to China. Easing the arbitrage process would make it easier for futures contracts to lift global benchmarks as capital inflows cause other markets to adjust.
According to Sterck, the exchange has shared ambitions about opening offshore vaults in the future, to take a bigger role in the price discovery process.
“China is the world's largest market for many commodities, but it hasn't necessarily been as influential in global price discovery yet,” he said.
Platinum is on track for a third annual deficit this year, helped by supply disruptions in top producer South Africa. The automotive and jewelry sectors are among the biggest consumers, but high borrowing costs have been a problem for manufacturers who use the metal to produce goods ranging from chemicals to glass and laboratory equipment. Industrial users often choose the less capital-intensive leasing option rather than purchasing the product outright. Given the cost of borrowing, a decision to buy could drive prices higher.
The transition to electric vehicles had long weighed on platinum and its sister metal, palladium, both of which are used in catalytic converters to filter pollution. Still, slower-than-expected adoption of electric vehicles in some markets has boosted confidence, and this week the European Union eased requirements that would have halted sales of new gasoline and diesel cars from 2035.
Platinum rose 2.2% to $1,885.40 an ounce at 3:55 p.m. in London. Palladium, the sister metal, gained as much as 3.1%.
