Gold is expected to keep climbing
Platinum may also hold steady or rise
Palladium is losing steam
Gold, platinum, and palladium are heading in different directions in 2025, driven by changes in demand, supply shortages, and shifts in industries that use these metals.
Gold is expected to keep climbing, as more investors buy it for security during uncertain times. Platinum may also hold steady or rise, thanks to supply shortages and increased use in hybrid cars.
On the other hand, palladium is losing steam. Since electric vehicles (EVs) don’t need palladium for their engines, demand for the metal is shrinking as EV adoption grows.
These trends will have a direct impact on exchange-traded funds (ETFs), which allow investors to gain exposure to these metals without buying the physical commodities.
Investors generally benefit through capital appreciation—as metal prices rise, the value of their ETF units also increases.
Gold
Market Drivers:
- ETFs showing sustained investment activity
- Expected lower US real interest rates
- Increasing geopolitical uncertainty
- Central banks expanding gold reserves
Price Targets:
- RMB forecasts gold near $3,000/oz by end-2025
- UBS predicts record highs for the precious metal
2024 ETF Performance on the BSE:
- NewGold ETF: +33.5%
Platinum
Supply Side:
- Market expected to tighten gradually
- Supply constraints likely to drive prices higher in mid to long-term
Demand Outlook of Automotive Sector:
- Projected 2% decline in automotive demand (2025)
Offsetting Factors:
- Growing hybrid vehicle market
- Potential substitution of palladium with platinum
Key Investment Takeaway:
- Supply constraints should support prices despite some demand weakness in traditional automotive use, with new growth opportunities emerging from hybrid vehicles and palladium substitution.
Palladium
Current State:
- Price trended down since peak of $3,002/oz (Feb 2022)
Key Challenge: Auto Sector Transition
- Automotive sector represents 80% of palladium demand
EV market share projections:
- 2024: 13.2%
- 2025: 16.7% (projected)
- Impact: EVs use no palladium, reducing overall demand
Outlook:
Bearish forecast due to:
o Supply surplus
o Declining automotive demand
o Accelerating EV adoption
Investment Implications:
o Structural decline likely as auto industry transitions to EVs, suggesting continued downward pressure on palladium prices.
·
NewPall ETF performance on the BSE:
o Flat performance in 2024
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