Platinum Soars to Record High on Supply Crunch and EU Combustion Ban Reversal

Economic

Commodity

Summary:

Platinum prices surged 8% to an all-time high of $2,413.62 per ounce on Friday, driven by tightening global supply, a surprise EU policy shift allowing continued combustion-engine sales...

Historic Rally Marks Supply-Demand Rebalance

Platinum has officially entered historic territory, jumping 8% in early Asian trading to a new record of $2,413.62 per ounce. This surge places the metal on track for its largest annual gain on record, fueled by a rare combination of structural supply shortages and shifting policy frameworks that could reinvigorate industrial demand.

The rally is causally linked to both constrained production and unexpected demand revival signals. Supply tightness has been building through 2025, exacerbated by output disruptions in South Africa the world’s largest platinum producer amid power shortages and labor unrest. Refinery maintenance delays and logistical bottlenecks in Russia have also contributed to shrinking global inventories.

EU Reversal Spurs Demand Shock

The most immediate demand-side catalyst was the European Union’s reversal of its planned 2035 ban on combustion-engine vehicles. While previously slated to eliminate new internal combustion engine (ICE) sales in favor of electric vehicles (EVs), the policy shift reportedly driven by lobbying from Germany’s powerful auto sector reopens the door for prolonged use of hybrid and fuel-efficient ICE vehicles.

This decision has significant implications for platinum. The metal is a key component in catalytic converters, particularly for diesel-powered engines. The reversal signals a potential extension of platinum's industrial demand lifecycle, which had previously been expected to decline over the next decade.

This marks a clear causal relationship: the policy reversal directly extends the projected utility of platinum in automotive manufacturing, triggering a sharp repricing by markets.

Investor Rotation Amplifies Momentum

Investor flows have also shifted in platinum’s favor, partly due to the meteoric rise in gold and silver prices. With gold hitting a record above $4,500 per ounce and silver gaining over 150% year-to-date, some speculative capital has rotated into platinum in search of relative value.

This capital inflow is not merely correlated but functionally supportive: as investors diversify across precious metals, platinum benefits from increased inflows into exchange-traded funds and direct physical purchases.

Implications and Market Outlook

The platinum rally is likely to have ripple effects across industrial commodities. The metal’s traditional use in automotive, chemical, and even green hydrogen applications means the price surge could pressure manufacturing margins and prompt substitution strategies over time.

However, with physical supply unlikely to respond quickly given the capital intensity and regulatory hurdles associated with mine expansion near-term prices may remain elevated.

Analysts are now revising 2026 price forecasts upward, with several expecting the metal to average above $2,200 in the first half of the year. Any further geopolitical disruptions, particularly in southern Africa or Russia, could exacerbate the rally.

Platinum’s record-setting rise reflects a potent mix of shrinking global supply, unexpected policy shifts in the EU, and strong investor interest fueled by volatility in the broader precious metals market. As structural fundamentals tighten and sentiment swings in favor of hard assets, platinum may continue to outperform its peers in early 2026 reshaping expectations for the metal’s role in both legacy industries and emerging clean energy applications.

Source: Reuters

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Economic

Commodity

Venezuelan Quarantine Triggers Fresh Supply Anxiety

Brent crude futures edged up 0.4% to $62.48 per barrel, while U.S. West Texas Intermediate (WTI) also climbed 0.4% to $58.58 in early Friday trading. The gains follow a U.S. directive intensifying economic restrictions on Venezuelan oil, including what has been described as a "quarantine" policy lasting at least two months. While not a military blockade, the effort aims to curb Venezuela’s oil exports through non-military means, marking a strategic escalation in U.S. pressure on the Maduro government.

The causal link between U.S. policy and market movement is clear. Venezuela is a significant source of heavy crude in the Atlantic basin, and any disruption to its exports particularly amid broader Latin American supply dynamics tends to elevate short-term price risk premiums in global markets.

Geopolitical Tensions in Nigeria Add to Supply-Side Uncertainty

Simultaneously, U.S.-led airstrikes on Islamic State targets in northwest Nigeria, conducted at the request of the Nigerian government, have introduced another layer of geopolitical uncertainty. While Nigeria’s main oil-producing regions lie in the south, the broader instability raises concerns over national security and production continuity.

Though not immediately impactful on physical supply, these events contribute to a rise in perceived geopolitical risk, supporting modest price gains. However, the correlation between conflict zones and supply risk is often asymmetrical only sustained threats near key oil infrastructure materially affect long-term prices.

Supply Disruption in Kazakhstan Compounds Risk

Further complicating the global supply picture, shipments through the Caspian Pipeline Consortium (CPC) from Kazakhstan are expected to drop by one-third in December the lowest volume since October 2024. The reduction follows a Ukrainian drone attack on the primary export terminal, highlighting the vulnerability of energy infrastructure even in regions not directly involved in major conflicts.

Although Kazakhstan’s exports form a relatively small portion of global supply, the disruption underscores a growing theme of supply chain fragility and infrastructure risk. These isolated disruptions, while not individually transformational, cumulatively increase upward pressure on prices, especially when inventory levels are low.

Despite Short-Term Gains, Oil Heads for Steep Annual Decline

Despite Friday’s uptick, both major crude benchmarks are on track for double-digit losses in 2025. Brent is set to fall by roughly 16%, and WTI by around 18%, marking the sharpest annual drop since 2020 when the COVID-19 pandemic led to a global collapse in oil demand.

This year’s price decline reflects structural market shifts. Global supply is projected to outpace demand in 2026 as production growth particularly from the U.S. and non-OPEC+ countries outstrips consumption. Additionally, concerns about slowing economic growth, uncertain Chinese demand recovery, and accelerated energy transition efforts have all capped oil’s upside.

Market Awaits U.S. Inventory Data for Demand Signals

Investors are now looking ahead to official U.S. Energy Information Administration (EIA) inventory data, delayed until Monday due to the Christmas holiday. The figures will provide updated insight into crude stockpiles and demand trends in the world’s largest oil consumer.

If the data reveals stronger-than-expected drawdowns, it may support prices in the near term. Conversely, any evidence of weakening demand could accelerate downward pressure heading into early 2026.

Oil prices have gained on the back of Venezuelan export constraints and geopolitical tensions in Nigeria and Kazakhstan, but these short-term catalysts are overshadowed by broader bearish fundamentals. As 2025 ends, the market remains focused on excess supply risks and macroeconomic headwinds. Without a structural disruption or sustained demand rebound, oil is likely to remain subdued in early 2026 despite episodic volatility.

Source: Reuters

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Economic

Tokyo CPI Slows, Yet Inflation Remains Above Target

Japan’s core consumer price index (CPI) for Tokyo rose 2.3% year-on-year in December, slowing from 2.8% in November and missing the market forecast of 2.5%. The deceleration was partly due to base effects from prior utility bill increases and softer food cost inflation. However, inflation still remains above the Bank of Japan’s (BOJ) 2% target, marking nearly four consecutive years of elevated core inflation in the capital.

A more refined gauge of underlying demand-led inflation, which excludes both fresh food and fuel, registered a 2.6% increase in December. Though slightly below November’s 2.8%, this figure remains crucial for the BOJ, as it offers insight into persistent pricing dynamics tied to domestic consumption rather than external cost shocks.

Policy Implications: BOJ Faces Delicate Balancing Act

While the CPI data indicates a temporary easing in headline inflation, it does not represent a structural shift away from inflationary trends. The BOJ, under Governor Kazuo Ueda, has been signaling that Japan is gradually transitioning toward sustainable inflation supported by wage growth and stronger consumption. The central bank raised interest rates to a three-decade high of 0.75% earlier this month, marking a significant departure from its ultra-loose monetary regime.

Ueda reinforced this view in a recent speech, stating that Japan is "making steady progress" in reaching its 2% target durably, with wage gains playing a key supporting role. Therefore, while December’s moderation might reduce the urgency of aggressive hikes, it does not eliminate the causal momentum driving policy normalization.

The BOJ’s next meeting, scheduled for January 22–23, will weigh this latest inflation data alongside updated growth and inflation projections. If economic fundamentals remain stable, the BOJ could opt for another rate increase later in 2026.

Yen Weakness Could Trigger Renewed Price Pressures

The Japanese yen’s depreciation currently hovering around ¥155 to the U.S. dollar adds another layer of complexity. As noted by Dai-ichi Life economist Yoshiki Shinke, the weak yen could provide companies with justification to raise prices again, especially on imported food and consumer goods, thereby creating a secondary wave of cost-push inflation.

This introduces a feedback loop where currency weakness triggers inflation persistence, even as headline figures decline. The BOJ must now navigate between tightening policy to contain imported inflation and preserving economic momentum amid weak factory output and uncertain global demand.

Mixed Economic Data Paints a Nuanced Picture

Beyond inflation, Japan’s broader economic indicators send mixed signals. Industrial production fell 2.6% in November worse than expected due to declining automobile and lithium battery output. However, manufacturers expect a rebound in December and a significant 8.0% rise in January, suggesting temporary disruptions rather than long-term contraction.

Retail sales rose 1.0% year-on-year in November, slightly above expectations, indicating stable domestic demand. Meanwhile, the government has approved a record fiscal budget of $785 billion for 2026, which may bolster short-term consumption but risks adding pressure to Japan’s already strained public finances.

Tokyo’s slowing core inflation in December offers some evidence of moderating cost pressures, particularly in food, but does not derail the Bank of Japan’s tightening trajectory. Persistent demand-driven inflation, a weak yen, and policy confidence in wage-supported growth suggest the BOJ remains on track for gradual rate hikes. As Japan enters 2026, monetary policy will continue to walk a tightrope between stabilizing inflation and nurturing economic recovery.

Source: Reuters

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Political

Economic

China's solar installations in November surged to the highest in six months, extending an end-of-year recovery.

Nationwide, about 22 gigawatts of solar power were installed last month, according to data released by the National Energy Administration on Friday. That's the highest since May when additions hit a record, but lower than the 25 gigawatts added in the same period a year earlier.

Installations tend to rise near the end of the year as developers aim to complete projects within the calendar year. However, activity peaked much earlier this year, when installations rose to a record 93 gigawatts in May ahead of policy changes. That front-loaded demand led to a slump in capacity additions in the subsequent months, with numbers only beginning to recover in September.

The November figures are likely also due to state-owned enterprises rushing to finish projects before the end of the nation's 14th five-year plan. Beijing is expected to announce a new national plan in March.

BloombergNEF has lowered its 2025 forecast installations for China by 9% to 372 gigawatts, followed by a 14% contraction in 2026, as the nation deals with a range of policy shifts that have cooled demand growth.

China also added 12.5 gigawatts of wind power in November, according to the NEA.

Source: Bloomberg Europe

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Economic

Commodity

Gold Hits New Peak as Market Bets on Lower Rates

Spot gold rose 0.5% to $4,501.44 per ounce by 02:09 GMT on Friday, after briefly touching a new record of $4,530.60 earlier in the session. This rally reflects a surge in investor demand for gold as a defensive asset, fueled by uncertainty in equity markets and evolving expectations surrounding U.S. monetary policy.

The upward movement in gold is causally linked to mounting speculation that the U.S. Federal Reserve will initiate a series of rate cuts in 2026. With inflation pressures softening and labor market indicators weakening, markets are increasingly pricing in looser policy ahead, which typically reduces the opportunity cost of holding non-yielding assets like gold.

Safe-Haven Appeal Rises Amid Geopolitical and Market Uncertainty

Aside from macroeconomic drivers, gold’s appeal has grown due to elevated geopolitical risks and a broader pullback in risk sentiment. Ongoing concerns over an overheating AI-driven stock market, coupled with doubts about corporate earnings sustainability, have pushed investors toward traditionally stable assets.

The movement into gold, rather than being merely correlated with market volatility, stems from a direct reallocation of capital in response to perceived systemic risks both political and financial. This is further supported by strong flows into other precious metals, including silver, which recently hit its own record high.

Outlook and Market Implications

With central banks across the globe, particularly the Fed, leaning toward policy easing, analysts expect gold to remain well supported. Real interest rates are expected to trend lower, which historically correlates positively with precious metal prices.

If the Fed confirms a dovish trajectory in its upcoming meetings and global risk aversion persists, spot gold could challenge higher resistance levels beyond $4,550 in early 2026. However, if inflation surprises to the upside or geopolitical tensions ease, short-term corrections may follow.

Gold’s record-breaking rally to over $4,530 per ounce signals both a macroeconomic inflection point and a psychological shift in investor behavior. As central banks prepare to pivot and risk appetite moderates, gold's dual role as a store of value and inflation hedge continues to attract institutional and retail capital alike. The trend reinforces the metal’s historical status as a barometer of uncertainty in a rapidly evolving global financial environment.

Source: Reuters

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Economic

Stocks

Positive Start for Asia Despite Holiday Closures

Asian equities opened on a positive note Friday, buoyed by global optimism following Wall Street’s record highs. However, activity remained subdued as key markets like Australia and Hong Kong were closed for the Boxing Day holiday. Still, major indices that remained open posted moderate gains, suggesting that investor sentiment remains resilient heading into the final trading sessions of 2025.

Japan’s Nikkei 225 rose 0.47%, while the broader Topix index climbed 0.27%. Real estate and technology sectors led the gains, with companies like Nexon and SoftBank rising 2.17% and 2.06% respectively. South Korea’s Kospi added 0.53% and the Kosdaq rose 0.42%, continuing the positive momentum seen across Asian markets since mid-December. In contrast, China's CSI 300 index edged 0.15% lower at the open, reflecting lingering domestic concerns amid broader regional strength.

Tokyo CPI Data Reinforces Tightening Bias

Japan’s economic data offered some insight into the Bank of Japan’s policy outlook. Core consumer prices in Tokyo rose 2.3% year-on-year in December, remaining above the BOJ’s 2% inflation target. Although the figure was slightly below November’s 2.8% reading and the Reuters poll forecast of 2.5%, it still suggests that inflationary pressure is persisting, reinforcing the case for continued policy tightening.

The Tokyo CPI is widely viewed as a bellwether for nationwide inflation trends. The data strengthens the causal narrative behind the BOJ’s gradual shift away from ultra-loose monetary policy, though the modest pullback in the inflation rate may offer policymakers some breathing room.

Silver Surges to New Record as Safe-Haven Demand Grows

Silver extended its rally on Friday, soaring over 4% to a historic high of $74.89 per ounce. The metal has now gained more than 159% year-to-date, outpacing most other major asset classes. The spike reflects increased demand for safe-haven assets as investors grapple with uncertainties over the timing and scope of potential U.S. Federal Reserve rate cuts and the sustainability of the AI-driven equity market rally.

The surge in silver can be partially explained by a shift in risk appetite: with some investors concerned about stretched valuations in tech stocks and growing signs of speculative froth, precious metals are regaining favor. Moreover, rising geopolitical tensions and volatility in fiat currencies have supported flows into hard assets.

This rally is not just correlated with broader market uncertainty—it is causally driven by deteriorating confidence in risk assets and expectations that real yields may soften if central banks pause or reverse tightening cycles in early 2026.

U.S. Markets Provide Global Tailwind

U.S. equity futures ticked slightly higher during the Asian session, after the S&P 500 closed at a record high for the second consecutive day on Wednesday. The index gained 0.32% to finish at 6,932.05, while the Dow Jones Industrial Average rose 288.75 points (0.60%) to 48,731.16, also notching a record close. The Nasdaq Composite added 0.22% to settle at 23,613.31.

These gains provided a psychological boost for Asian markets, reinforcing confidence in global growth heading into 2026. The continued strength in U.S. equities, especially in technology and industrials, is causally linked to robust corporate earnings, stable inflation expectations, and easing fears of a sharp Fed pivot.

Asia-Pacific markets showed resilience on Friday, overcoming thin holiday trading to post modest gains. Japan and South Korea led the charge, while silver’s record-breaking surge highlighted investors’ search for stability amid persistent macroeconomic uncertainty. Tokyo's inflation data confirmed that price pressures remain steady, supporting the Bank of Japan's slow but steady shift in policy. As global markets approach the end of 2025, the balance between optimism and caution is likely to define investor behavior in the opening weeks of the new year.

Source: CNBC

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Economic

AI Takes the Lead, But Humans Shape the Strategy

Miro Mitev, CEO and founder of SmartWealth Asset Management, is a pioneer in applying neural networks to asset management. While his firm’s investment decisions are executed entirely through artificial intelligence, Mitev asserts that human involvement is not only present it’s indispensable. The design, data preparation, parameter setting, and ongoing refinement of AI systems all depend on skilled human judgment.

Having first explored neural networks in 1997 while studying at the Vienna University of Economics and Business, Mitev has spent over two decades building predictive models for banks and tech firms. This deep experience culminated in the creation of SmartWealth, whose flagship fund, IVAC, targets annualized returns of 14–15% and is managing rapid growth with ambitions of reaching $2 billion in assets under management.

The Balance Between Trusting the Model and Guiding the System

SmartWealth’s operational philosophy is rooted in a paradox: the AI runs the show, but humans determine the rules of the game. Mitev explains that once an algorithm is deployed, human interference in decision-making becomes counterproductive. "The worst is to overrule the results," he warns, arguing that AI’s pattern recognition capabilities often outperform human intuition, even when results appear unclear at first glance.

Yet this trust in the model is conditional. The AI’s effectiveness hinges on clean, reliable, and relevant data. Human oversight is crucial to prevent and correct overfitting a condition where the model focuses excessively on noise rather than meaningful, causal indicators. Mitev stresses that what appears statistically significant may not have genuine predictive power in markets unless it reflects a cause-and-effect dynamic.

10-Year Performance Underscores Algorithmic Edge

SmartWealth’s results bolster the case for algorithmic investing. From 2015 to November 2025, the firm posted returns of 407.63%, compared with just 145.34% from its benchmark index. This outperformance, achieved without emotional decision-making, illustrates the power of consistent, data-driven model application. Mitev claims his system can reliably forecast market conditions up to one month ahead a horizon sufficient for short-term tactical positioning.

This forward-looking capacity stands in contrast to human investors, who are often swayed by sentiment and short-term noise. Even major institutions like the European Central Bank have flagged the potential role of “fear of missing out” in current market trends, raising concerns about momentum-driven investing based on emotion rather than fundamentals.

Guarding Against AI’s Known Pitfalls

Despite the apparent superiority of AI in investment decisions, Mitev is transparent about its vulnerabilities. He acknowledges that models can “hallucinate” or deliver false results, primarily due to overfitting, poor data quality, or incorrect model structure. To mitigate these risks, SmartWealth employs rigorous model validation, simulation in live environments, and continual refinement.

Importantly, Mitev underscores the value of in-house AI development. Custom-built systems not only improve reliability but also provide strategic differentiation in an industry where generic models risk becoming commoditized.

SmartWealth’s approach to investing reveals a new paradigm in finance where artificial intelligence executes strategy, but humans remain the architects of success. By merging computational power with human judgment in design and oversight, Miro Mitev’s firm exemplifies how AI-driven asset management can outperform traditional methods so long as the human role is not underestimated. In this evolving landscape, it’s clear that while machines may make the trades, it is still people who shape the future of investing.