Why Platinum and Palladium ETFs Outperformed Gold in 2025

The year 2025 marked a dramatic shift in the precious metals landscape, with platinum and palladium ETFs outperforming gold by significant margins. The abrdn Physical Platinum Shares ETF (PPLT) surged by 40-50% year-to-date, while the Sprott Physical Palladium Trust (PALL) saw prices climb over 85% for the year, far outpacing the SPDR Gold Shares (GLD), which posted gains of under 30%. This divergence reflects a confluence of structural supply constraints, robust industrial demand, and policy-driven tailwinds that have redefined the dynamics of the platinum group metals (PGMs) market.

Supply Constraints: A Perfect Storm

The outperformance of PPLT and PALL is rooted in tightening physical supply conditions. Platinum, for instance, reached an all-time high in 2025, driven by historically low above-ground inventories and a structural deficit of 692,000 ounces, marking the third consecutive annual shortfall. Above-ground stocks have dwindled to just five months of global demand, exacerbating price pressures. Similarly, palladium markets faced acute shortages, with mine output constrained by geopolitical disruptions and high lease rates. These imbalances have created a self-reinforcing cycle: limited supply, coupled with strong demand, has driven prices higher, attracting investor inflows into PGM ETFs.

Industrial Demand: The Automotive Sector's Resilience

A critical driver of this outperformance has been the automotive sector's sustained demand for PGMs. Platinum and palladium are indispensable in catalytic converters, which reduce harmful emissions in internal combustion engines (ICEs). While global markets have debated the future of ICEs, policy signals under the Trump administration have signaled a less aggressive transition to electric vehicles (EVs), preserving demand for these metals. This policy stance has reinforced expectations of continued ICE production, ensuring a steady need for platinum and palladium. In contrast, gold's demand remains largely speculative, making it more susceptible to macroeconomic volatility and less responsive to industrial trends.

Policy Tailwinds: Geopolitical and Trade Dynamics

Geopolitical uncertainty and evolving U.S. trade policies have further tightened PGM supply chains. Disruptions in global trade routes and sanctions on key producing regions have exacerbated supply shortages, while geographic demand dislocations have driven up lease rates. The Trump administration's focus on reshoring manufacturing and reducing reliance on foreign supply chains has also indirectly bolstered PGM demand, as automakers and clean energy firms prioritize domestic production. These factors have created a favorable environment for PPLT and PALL, which offer exposure to metals critical for both traditional and emerging industrial applications.

ETF Inflows and Investor Behavior: A Shift in Preferences

While gold ETFs like GLD attracted $5.2 billion in inflows in November 2025 alone, platinum and palladium ETFs saw more modest but impactful investment. PPLT's assets under management (AUM) reached $1.6 billion by September 2025, reflecting strong investor interest in its dual role as an industrial and investment asset. Similarly, PALL's AUM hit $794.68 million, underscoring growing recognition of palladium's strategic value. Investors appear to be favoring PGMs as less overbought alternatives to gold and silver, particularly as platinum's price approached $2,200-a level last seen during the 2008 financial crisis.

Outlook for 2026: Structural Tailwinds Persist

Looking ahead, the structural imbalances in PGM markets suggest continued outperformance in 2026. The platinum market is projected to remain in deficit, with above-ground inventories unlikely to recover quickly given mine output constraints. Palladium's demand is also expected to hold firm, supported by its role in hydrogen technology and industrial catalysts. Meanwhile, gold's appeal as a safe-haven asset may wane if macroeconomic risks abate, further narrowing its relative gains. For investors, PPLT and PALL offer a compelling case: exposure to metals with dual utility in both industrial and investment contexts, underpinned by supply-side rigidity and policy-driven demand.

In conclusion, the 2025 outperformance of platinum and palladium ETFs over gold is not a fleeting anomaly but a reflection of deeper structural forces. As supply constraints persist and industrial demand remains resilient, PGMs are poised to outshine traditional safe-haven assets in the near term. For those seeking to diversify beyond gold, the platinum and palladium markets present a compelling opportunity.