Citi expects PGM prices to recover as easing inflation relieves the pressure on the Fed to hike rates

Citi has revised its outlook for platinum group metals (PGMs), citing a potential recovery in prices as inflationary pressures ease and reduce the urgency for aggressive Federal Reserve rate hikes. While inflation remains elevated, recent data indicate that its breadth and momentum are less pronounced than in past inflationary periods, such as the 1970s or the post-pandemic surge of 2021–2023. This moderation in inflation could ease the pressure on the Fed to maintain or increase interest rates, which has been a key factorsuppressing non-yielding assets like PGMs.

The firm notes that despite high inflation, price pressures remain concentrated in specific sectors rather than widespread across the economy. This narrower inflationary impact, combined with strong corporate profit growth—particularly in the technology sector—supports a more stable economic outlook. Citi also highlights that 10 of 11 S&P 500 sectors have seen profit margin expansion, reinforcing confidence in the broader equity market and indirectly supporting demand for PGMs in industrial and technological applications.

Looking ahead, Citi anticipates that the platinum market will continue to experience deficits, with an average annual shortfall of 331,000 ounces expected from 2026 to 2030. Palladium, meanwhile, is projected to transition from deficits to surpluses starting in 2027. These trends are influenced by structural supply constraints and evolving demand dynamics, particularly in the automotive and industrial sectors.

While the firm acknowledges the risks posed by large upcoming IPOs, it believes index inclusion and gradual market integration will mitigate potential disruptions. Citi emphasizes importance of fundamentals over headline-driven movements—such as profitability and valuation—when assessing the outlook for PGMs.