The 8th of July 2025 should actually have been rather a quiet day on the stock market. Even the normally hectic Wall Street is expecting only a few economic indicators, while there is likely to be little news from companies either, shortly before the start of the reporting season. Nevertheless, the day could turn out to be a turbulent one, because 8 July marks the end of the 90 days for which the USA had suspended the tariffs it had previously announced against many trading partners. The grace period has been running since 9 April, a week after president Donald Trump delivered the sweeping blow to trade policy. Unsurprisingly, reports on the progress of negotiations between the US and Beijing, the EU and other trading partners are having a significant impact on stock market activity. While equity markets are fluctuating wildly at times, a recurring theme of the last few weeks and months has been the run on precious metals.
Gold is leading the way: the most important precious metal has appreciated by almost 30% since the turn of the year, with the price of a troy ounce hitting USD 3,500 for the first time in April. Although gold has consolidated somewhat since then, silver has recently broken out upwards. Before Whitsun, the ‘poor man's gold’ stood at USD 36.29 per troy ounce, its highest value since February 2012. Other members of the precious metals group alongside gold and silver include platinum and palladium. This pair were unable to keep pace with the two leading representatives of the segment, but things are moving here too. Platinum especially has been in demand recently, and is set to move higher after several years of treading water. The different performances correlate directly with the character of the precious metals. Gold is used primarily for jewellery and is also bought by investors and central bankers as a safe haven currency and protection against inflation – its technological use is of rather secondary importance. By contrast, industry is the key buyer of silver, platinum and palladium.
Alongside supply and demand, the relationship between their prices can also impact the performance of the precious metals. One highly regarded indicator here is the gold/silver ratio, which reveals how many troy ounces of silver are needed to buy the same amount of gold. Shortly after Trump’s hammer blow on tariffs, the key ratio climbed into the three-digit range for the first time in nearly five years. That also put the ratio well above the multi-year mean (see graph 1). This development suggests that gold is relatively overvalued or, to put it another way, that silver is underpriced. Historically, gold is also expensive relative to platinum. In April the yellow metal exceeded the price of platinum by a factor of almost 3.6, although that record high ratio has since come down somewhat (see graph 2). The main buyer of platinum is the motor industry, which needs the metal for the construction of catalytic converters in particular. The tariff dispute presents a threat to this key industry, so to that extent the weakness of platinum relative to gold especially seems plausible.
Nevertheless, the global market is undersupplied. According to a recent forecast from the World Platinum Investment Council, 2025 could be the third year in a row in which supply has lagged behind demand. The industry organisation also reports that platinum is increasingly being used as a substitute for gold. China is seeing a veritable boom at the moment, with the local jewellery industry processing 26% more platinum in the first quarter of the year than at the start of 2024. At the same time, sales of platinum bars and coins in China jumped 140% from January to March to reach a record 31,000 troy ounces. Looking forward, the possible replacement of or valuations relative to gold remain a potential driver for silver, platinum and palladium. The prospects for this trio also hinge on the progress of the tariff dispute and on economic trends. It goes without saying that the squabble also plays a central role for the dominant precious metal, while the US dollar exchange rate and changes in interest rates in the dollar sphere also have an impact. These two parameters are likewise closely linked to trade policy. In short, the almost four weeks until 8 July promise plenty of tension even and especially in the precious metals market.
Source: Reuters, own calculations, as at: June 2025. Past performance is not a reliable indicator of future performance.