Why Are Gold, Silver, and Platinum Prices Rising?

The words "Gold hits record high!" are seen daily in Yahoo News and elsewhere. Not only gold, but also silver and platinum continue to rise. Precious metals are not only for jewelry and ingots, but are also "international commodities" closely linked to the movements of the global economy, industry, and currency. That's why there is always a reason when the market price rises.

While organizing the rise in gold, silver, and platinum prices from the perspective of "why does it happen?", we will explain in detail the "reasons why each metal is likely to rise."

Market prices are determined by "supply and demand." But precious metals have another layer of reasons.

The basics of pricing are simple: prices rise when more people want it (demand increases) or when it becomes harder to obtain (supply decreases).
However, precious metals are characterized by the fact that the following factors tend to influence their prices.

• Changes in currency value (dollar or yen)

• Balance of interest rates (yield) and inflation

• Geopolitical risks (conflicts, sanctions, political instability)

• Central banks and institutional investors' "asset protection" movements

• Industrial demand (solar panels, automotive catalysts, hydrogen-related, etc.)

In other words, precious metals are not so much "materials for accessories" as they are mirrors of global anxiety, policies, and industries.

Reasons why gold is likely to rise: Strong when the world shifts to "defense"

1) Central banks continue to buy gold

A particularly significant factor behind recent gold prices is gold purchases by central banks in various countries. Gold purchases by central banks worldwide have remained high, and it has been reported that net purchases were also substantial in 2024.

The reason central banks are increasing their gold holdings is, in a word, "diversification." The move to reduce reliance on specific currencies and incorporate gold as an asset that tends to retain value in times of emergency often underpins the market.

2) Easily bought as a "safe haven" when inflation and uncertainty are high

When inflation is high or the future is uncertain, there is a psychological tendency to believe that "the value of cash may diminish." In such times, gold is often chosen as a "repository of trust."
This characteristic is also why gold is strong despite being an "asset that does not generate dividends or interest." The higher the evaluation of its safety, the more likely gold is to be bought.

3) Relationship with interest rates: The lower the real interest rate, the stronger the tailwind

Since gold does not generate interest, it is generally said that "the higher the interest rate, the less favorable" it is.
However, what is important is not just the nominal interest rate, but the real interest rate after deducting inflation. In situations where inflation is strong and real interest rates do not rise as expected, the relative attractiveness of gold tends to increase.

Reasons why silver is likely to rise: A "two-pronged approach" of investment and industrial demand

Silver is a precious metal like gold, but its characteristics are quite different.
While silver is a "defensive asset," it is also a metal with very large industrial applications.

1) Industrial demand, such as for solar power and electrical systems, is likely to grow

Silver has excellent electrical conductivity and is used in a wide range of fields, including electronic components. Solar power is a particularly noteworthy area. Industry organizations and market reports repeatedly mention the outlook for silver demand and the significant presence of the solar sector.

2) "Shortages" are easily perceived if supply cannot keep up

Silver is often produced as a "by-product," making it difficult to rapidly increase production even if prices rise. When supply and demand tighten, silver tends to experience larger price movements than gold, characterized by "dramatic ups and downs."

3) Silver tends to move in tandem with gold

From an investor's perspective, when gold is in the spotlight, silver also tends to be bought as part of the "precious metals" category.
However, silver is also strongly influenced by industrial demand, so it is closer to understanding that momentum is gained when "gold rises + strong industrial demand" are combined.

Reasons why platinum is likely to rise: Supply is concentrated + applications are in a "renewal phase"

Platinum may be mentioned less frequently in the news compared to gold and silver. However, its market price is susceptible to "supply imbalances," and it can suddenly attract attention when the conditions are right.

1) If the market is in "supply deficit," it tends to impact prices

Platinum's major producing countries are limited, and disruptions in the supply side (power outages, labor issues, operational restrictions, etc.) can easily affect supply and demand for this metal.
In fact, reports have indicated a "supply deficit" outlook for the platinum market, and the situation of tight supply and demand has continued to be a focus.

2) Evaluation likely to fluctuate due to "industrial transformation" such as automotive catalysts and hydrogen

Platinum is known as a metal used in automotive catalysts (exhaust gas purification). While demand forecasts can fluctuate due to environmental regulations and changes in vehicle powertrains (such as electrification), there are also times when its "necessity is re-evaluated," leading to market movements.
Regarding investment and supply-demand forecasts, exchange-related explanations also organize the increases and decreases in supply, recycling, and demand.

Summary: The "common causes" for price increases can be organized into these three

While gold, silver, and platinum each have their own specific circumstances, the commonalities in times of price increases can be summarized in the following three points:

1. When the world becomes uncertain (risk aversion) → Gold tends to strengthen

2. Inflation/currency value fluctuations → Demand for defensive assets tends to emerge

3. Industrial demand + supply constraints → Silver and platinum tend to surge

Especially for gold, understanding that the continued high level of central bank purchases tends to form the "foundation" of the market will help you grasp the situation quickly.


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