Platinum prices are expected to steadily rise over the next two years and palladium prices to gradually fall as automakers switch to using platinum in autocatalysts to cut costs, a Reuters survey Thursday showed.
Both metals are used in engine exhausts, where they neutralise harmful emissions. Platinum is also used in other industries such as glassmaking, in jewellery and for investment.
Prices plunged last year as a global chip shortage forced automakers to slash production, reducing demand.
Longer term, both metals face reduced demand due to increased production of zero-emission electric vehicles by companies including Tesla Inc, General Motors Co and Volkswagen.
However, some analysts expect significant amounts of platinum to be used in hydrogen fuel cells that are an alternative way to power vehicles.
Platinum sank from a seven-year high of $1 336.50 an ounce in February to $901.30 in September and palladium from an all-time peak of $3 017.18 an ounce in May to $1 537.45 in December.
Both have bounced back this year, however, with the chip shortage expected to ease, boosting auto production, and the threat of a Russia-Ukraine conflict raising worries about palladium supply from top producer Russia.
Platinum on Thursday was trading around $1 020 an ounce and palladium around $2 300.
The median forecasts from a survey of 27 analysts and traders were for platinum to average $1 010 an ounce in the first quarter of this year, rising to $1 050 in the second quarter, $1 065 for the full year and $1 150 in 2023.
The median forecasts for palladium were for averages of $1 950 an ounce in the first quarter, $2 000 in the second quarter and $2 025 for the full year before slipping to $1 907 in 2023.
Another Reuters poll on Thursday showed that gold prices will drift lower in 2022 and 2023 as central banks raise interest rates.
Analysts said short-term gains were likely for platinum and particularly for palladium, which unlike platinum is undersupplied.
"Platinum and palladium (will) both benefit from the recovery in the auto sector," said StoneX analyst Rhona O'Connell.
But substitution by automakers of palladium for cheaper platinum -- and the gradual shift to electric vehicles -- "puts palladium on a path of shrinking deficits," said Nicky Shiels, a strategist at MKS PAMP.
Automakers account for around 85% of palladium demand, compared with 40% of platinum demand.
Platinum should benefit from economic growth, said independent analyst Ross Norman. "Good growth should be observed in the jewellery, automotive, industrial ... and by extension in the investment markets," he said.