Platinum and palladium explained: catalysts, supply risk and volatility

Platinum and palladium are two of the six platinum group metals, rare silvery metals that resist corrosion and are excellent catalysts. Most of their demand comes from catalytic converters in car exhausts, and most of their mine supply comes from just two countries, South Africa and Russia. That combination of concentrated industrial demand and concentrated supply makes them far more volatile than gold, and it means their prices often respond to car sales, emissions rules and power cuts at South African mines rather than to interest rates.

On trading platforms they usually appear as XPT/USD (platinum) and XPD/USD (palladium), quoted in US dollars per troy ounce, next to gold and silver. The similarity in quotation hides large differences in behaviour. If you have read gold and silver explained, think of this guide as covering the two metals in the same list that do not behave like them.

What the platinum group metals are

The platinum group comprises platinum, palladium, rhodium, ruthenium, iridium and osmium. They are usually mined together, often alongside nickel and copper, and separated during refining. Only platinum and palladium have liquid futures markets and are commonly offered as CFDs; rhodium in particular has a small, opaque market and is not something retail traders normally access.

Because the metals come out of the same ore, a mine does not choose how much platinum or palladium it produces. Output of each depends on the geology of the ore body. A South African mine produces mostly platinum with some palladium and rhodium; a Russian nickel mine produces much more palladium than platinum. That joint production is one reason supply responds so slowly to price.

Where the demand comes from

Catalytic converters

Catalytic converters use platinum group metals to turn carbon monoxide, hydrocarbons and nitrogen oxides in exhaust gas into less harmful compounds. This is the single largest use of both metals.

• Palladium has traditionally been the main catalyst metal in petrol (gasoline) engines, and car catalysts account for the large majority of palladium demand.
• Platinum has traditionally been the main catalyst metal in diesel engines, so the decline of diesel cars in Europe after the 2015 emissions-testing scandal weighed on platinum demand.
• Rhodium is used alongside them to deal with nitrogen oxides.

Tighter emissions standards in China, Europe and elsewhere increased the amount of metal needed per vehicle over the past two decades. Car production, the mix between petrol, diesel and hybrid engines, and emissions rules are therefore the main demand drivers.

Substitution

When one metal becomes much more expensive than the other, carmakers try to switch. During palladium's run-up in the late 2010s and early 2020s, when palladium traded well above platinum, manufacturers worked on substituting platinum into petrol catalysts. Substitution takes years because catalysts have to be redesigned and recertified, but it means a very high price for one metal tends to sow the seeds of its own demand loss. Traders follow industry commentary on substitution because it changes the long-run balance of both markets.

Electric vehicles

Battery electric vehicles have no exhaust and need no catalytic converter. Hybrids still have a combustion engine and still use catalysts. The pace at which battery vehicles take market share is therefore one of the biggest long-run questions for palladium in particular. It is a slow-moving theme: it shows up in changing analyst forecasts and fund positioning more than in day-to-day price moves.

Other industrial uses

Platinum is also used in the chemical and petroleum refining industries, in glass manufacturing, in electronics and in medical devices. It is used in some fuel cells and electrolysers for hydrogen, which some analysts see as a future source of demand; how large that demand becomes is uncertain. Palladium has smaller uses in electronics, dentistry and chemicals.

Jewellery and investment

Platinum has a significant jewellery market, historically strongest in China and Japan. Both metals are bought as bars, coins and through exchange-traded products, and investment flows can swing from strong buying to heavy selling from one year to the next, adding to volatility. Neither metal plays the reserve role that gold plays for central banks, and neither is a widely held safe haven.

Where the supply comes from

South Africa and platinum

South Africa's Bushveld Complex holds most of the world's known platinum reserves. According to the World Platinum Investment Council's figures, South Africa produced roughly 70% of the world's mined platinum in 2025, with Russia, Zimbabwe and North America making up most of the rest. South African mines are deep, labour-intensive and dependent on the national electricity grid, so supply is exposed to:

• Power shortages. Repeated rolling blackouts in South Africa have disrupted mining and smelting in several years.
• Labour action. A strike in the platinum belt in 2014 lasted about five months and is the best-known example of how quickly mine supply can be cut.
• Costs and investment. When prices are low, high-cost shafts close and new projects are delayed, which affects supply years later.
• Smelter and refinery outages. Processing is concentrated in a few facilities, so a breakdown at one can delay refined output.

Russia and palladium

Russia is the largest palladium producer, at around 40% of mined supply by most estimates, almost all of it from one company, Nornickel, in the Norilsk region of Siberia. South Africa is the second-largest source. That concentration creates political risk: sanctions, export restrictions, payment problems and logistics have all been concerns since Russia's invasion of Ukraine in 2022.

Recycling

A large share of supply, especially for palladium, comes from recycling spent autocatalysts from scrapped vehicles. Recycling volumes depend on how many old cars are scrapped, which in turn depends on economic conditions and on scrap prices. When used-car prices are high and owners keep cars longer, recycling slows, tightening the market.

Why both metals are so volatile

Several features combine:

1. Small markets. The annual platinum and palladium markets are tiny compared with gold, so a given amount of buying or selling moves the price more.
2. Concentrated supply. A problem in one country or one company can change the global supply picture overnight.
3. Concentrated demand. One industry, cars, dominates. News about car production, emissions rules or EV policy affects demand quickly.
4. Thin liquidity. Bid–ask spreads are wider than for gold, and fast markets can jump several dollars between trades.
5. Speculative positioning. Futures positioning can build up in one direction and unwind abruptly.

In practice it is common for platinum or palladium to move by several percent in a session when gold moves by less than one. Treat any position in these metals as a high-volatility trade.

The 2022 palladium spike

Palladium's behaviour in early 2022 shows what concentrated supply means in practice.

After Russia invaded Ukraine on 24 February 2022, traders feared that sanctions, flight bans over European airspace and payment problems would block Russian palladium exports. On 7 March 2022 spot palladium hit a record of about $3,440 an ounce, above its previous record of about $3,017 set in 2021. Within around a week it had fallen roughly 17% from that peak as it became clearer that Russian metal was still flowing, since Nornickel itself was not sanctioned.

Lessons for a CFD trader:

• Supply-driven spikes can reverse as fast as they appear. A trader buying near the top would have lost a large share of a highly leveraged position in days.
• Spreads widen exactly when prices move most. In fast markets, the cost of entering and leaving rises.
• Stops are not exit prices. In a market moving tens of dollars in minutes, a stop can be filled well away from its level; see slippage explained.

Platinum, palladium and gold

The relationship between the three metals has changed over time. For many years platinum traded above gold, and the price ratio between them was quoted as a sign of value. Since the mid-2010s platinum has mostly traded below gold, reflecting weaker diesel demand. Palladium rose from well below platinum to well above both platinum and gold at its peak, then fell back. These ratios are descriptive. They do not revert to any fixed level, and trading them assumes a relationship that the fundamentals have repeatedly broken.

Gold responds mainly to real interest rates, the US dollar, central-bank buying and safe-haven flows. Platinum and palladium respond to those factors too, because they are priced in dollars and partly held as investments, but industrial supply and demand usually dominate. Correlations with gold are positive on average but unstable, so holding gold and platinum together does not spread risk as much as it seems. The guide to currency correlation explains why correlations change over time.

How retail traders access platinum and palladium

CFDs

Most retail traders use CFDs quoted as XPT/USD and XPD/USD. Things to check in the specification:

• Contract size. Some providers use 1 troy ounce per contract, others 10, 50 or 100. The contract size sets the value of a $1 move.
• Pricing source. CFDs are usually priced from the over-the-counter spot market or from futures. On NYMEX, part of CME Group, the platinum futures contract is 50 troy ounces and the palladium contract 100 troy ounces.
• Hours. Both trade nearly around the clock on weekdays, but liquidity is thinnest in late US and early Asian hours.
• Financing. Rolling CFDs charge or credit daily financing based on the notional value.

Leverage limits

Under ESMA rules, gold CFDs are capped at 20:1 for retail clients, but platinum and palladium fall into the "other commodities" category, capped at 10:1. Silver is also 10:1. The UK FCA applies the same caps. See ESMA leverage limits and negative balance protection. Given the volatility described above, many traders use far lower effective leverage than the cap.

Other routes

Physical bars and coins carry dealer spreads, storage and insurance costs. Exchange-traded products holding physical metal exist in some markets. Shares in mining companies add company and country risk on top of the metal price.

Worked example: sizing platinum versus palladium

The figures below are illustrative, not current prices, and the contract size is an example. Use your own provider's specification.

You have a $10,000 account and risk 1% per trade, or $100. Your provider's contracts are 10 troy ounces each, so a $1 move is worth $10 per contract. You set stops at 1.5 times the average true range (ATR), a common volatility-based approach explained in where to put a stop loss.

Platinum

• Illustrative price: $1,000.00 bid / $1,001.50 ask. You buy at $1,001.50.
• Illustrative ATR: $20, so the stop is $30 away, at $971.50.
• Loss per contract at the stop: 30 × $10 = $300.
• Size: $100 ÷ $300 = 0.33 contracts, rounded down to 0.3 with a minimum step of 0.1. Planned risk: $90.
• Notional: 0.3 × 10 × $1,001.50 = $3,004.50. Margin at 10:1: about $300.

Palladium

• Illustrative price: $1,200.00 bid / $1,203.00 ask. You buy at $1,203.00.
• Illustrative ATR: $40, so the stop is $60 away, at $1,143.00.
• Loss per contract at the stop: 60 × $10 = $600.
• Size: $100 ÷ $600 = 0.17 contracts, rounded down to 0.1 with a step of 0.1 (risk $60), or 0.16 with a step of 0.01 (risk $96).

The same risk budget buys about half as much palladium as platinum, because the stop must be twice as wide to sit outside normal noise. That is the right outcome: the size reflects volatility, not conviction. The instruments position size calculator and margin calculator handle the arithmetic.

A supply-news gap

Suppose news of a major South African smelter outage breaks while you are short 0.3 platinum contracts from $1,000.00 with a stop at $1,030.00. The market reopens at $1,065.00 and your stop is filled near there. The loss is 65 × $10 × 0.3 = $195 instead of the planned $90. This kind of gap is the reason to treat the 1% figure as a planned loss, not a maximum, and to consider gap and weekend risk before holding through weekends.

Costs to watch

• Spreads. Wider than gold and silver in percentage terms, and much wider in fast markets and quiet hours.
• Financing. Daily charges on rolling CFDs, based on notional value, add up on longer holds.
• Currency conversion. Prices are in dollars, so euro or sterling accounts convert profit and loss.
• Minimum size effects. With large contract sizes, the minimum trade may be bigger than your risk plan allows. If 0.1 contracts already exceeds your risk budget at a sensible stop, the trade is too big for the account.

Common mistakes

• Treating them like gold. They are priced like precious metals but behave more like industrial commodities, with higher volatility and different drivers.
• Copying gold position sizes. A size that is sensible on XAU/USD can be too large on XPD/USD, both because of volatility and because leverage is capped at half the level.
• Assuming the ratio to gold must revert. Structural changes in car demand have moved these ratios for years at a time.
• Ignoring supply headlines. South African power and labour news and Russian sanctions or logistics news can move prices more than US data.
• Holding through thin hours with tight stops. Wider spreads late in the US session can trigger stops without any real change in the market.

Remember that most retail CFD accounts lose money. Smaller, more volatile markets make the effect of leverage more severe; see the risk warning.

Frequently asked questions

What is the difference between platinum and palladium?

Both are platinum group metals used mainly in catalytic converters. Palladium has traditionally been used mostly in petrol cars and platinum in diesel cars, with platinum also used in jewellery, chemicals and hydrogen technologies. Platinum supply is dominated by South Africa, palladium supply by Russia and South Africa.

Why is palladium so volatile?

Its market is small, most of its demand comes from one industry, and a large share of mine supply comes from one Russian company. Shifts in car production, substitution by carmakers or supply concerns can all move it sharply, as in March 2022 when it hit a record and then fell about 17% within a week or so.

What leverage can I use on platinum and palladium CFDs?

Retail clients in the EU and UK can use at most 10:1, the cap for commodities other than gold. Gold is capped at 20:1.

What do XPT and XPD mean?

They are the standard currency-style codes for platinum (XPT) and palladium (XPD), in the same way that XAU is used for gold and XAG for silver. XPT/USD is the price of one troy ounce of platinum in US dollars.

Will electric cars end demand for palladium?

Battery electric vehicles need no catalytic converter, so a growing share of them would reduce catalyst demand, while hybrids still use catalysts. How fast that happens depends on policy, technology and consumer choices, and forecasts vary widely. It is a long-run factor rather than a guide to short-term price moves.

Is platinum a safe-haven asset like gold?

Not in the usual sense. Platinum is held as an investment by some buyers, but its price depends mainly on industrial demand and mine supply, and it often falls when growth fears rise. Central banks do not hold it as a reserve asset.