Palladium hovered near $1,350 per ounce after touching an eight-month low, stabilizing as easing tensions in the Middle East improved risk appetite across commodity markets. It helped precious metals recover from recent selling pressure.
The broader shift in sentiment followed the announcement of an interim US-Iran peace deal, which pushed Brent crude futures below $80 a barrel after a nearly 5% drop in the previous session. The decline in oil prices prompted investors to scale back expectations for additional Federal Reserve tightening, with the probability of a December rate hike falling to around 60% from roughly 70% a week earlier.
Lower rate expectations weighed on Treasury yields, providing support for non-yielding precious metals. Palladium also benefited from short covering, although traders continued to monitor supply risks, global industrial demand, and the outlook for the automotive sector, which remains the metal’s most important end-use market.
Investors are also awaiting a series of central bank meetings this week, including the Federal Reserve’s rate decision on Wednesday, the first under new Chair Kevin Warsh. Over the past month, palladium has declined 3.84%, though it remains 30.39% higher than a year ago.
While market attention has focused heavily on the recent sharp decline in gold prices, the broader precious metals sector has also faced significant selling pressure. Platinum-group metals have been among the hardest hit, according to a Bank of America report.
Both platinum and palladium recently fell to their lowest levels of the year as slowing global economic growth and geopolitical tensions weighed on industrial demand. Bank of America’s commodity analysts said the rally in platinum-group metals has lost momentum since late January, partly due to gold’s price action and ongoing economic headwinds tied to the Middle East conflict.
Spot platinum recently traded around $1,711 per ounce, down more than 2% in the session, while palladium was quoted near $1,203 per ounce, up roughly 0.5%. Since a sharp selloff on Friday, platinum has lost more than 9% of its value, while palladium has fallen more than 6%. In subsequent trading, palladium recovered further, rising 1.5% to around $1,249–$1,264 per ounce in midweek sessions.
Despite the near-term weakness, Bank of America maintained a constructive long-term outlook for the sector. The bank said it remains positive on gold heading into the fourth quarter. It argued that any renewed rally in gold could draw investor interest back into platinum-group metals, helping support prices.
Bank of America continues to expect a significant recovery in platinum and palladium prices over the longer term, even as weak industrial and jewelry demand weigh on the market today.
The bank forecasts platinum to average around $3,000 per ounce between the fourth quarter of 2026 and the first half of 2027. Palladium is expected to average around $2,200 per ounce during the final three months of the year.
Platinum-group metals posted strong gains in 2025 as global trade tensions and threats of tariffs on precious metals disrupted liquidity in the physical market. However, analysts said much of that support faded after tariff threats failed to translate into broad implementation.
According to the report, the absence of tariffs led to more than 200,000 ounces of platinum leaving NYMEX warehouses, equal to roughly half of the inflows recorded during the second half of 2025. Palladium saw outflows in late January before flows reversed after the US Department of Commerce imposed final anti-dumping duties of 133% and countervailing duties of 109% on Russian palladium.
Bank of America also pointed to structural changes in demand as a major factor shaping the outlook for platinum-group metals.
Platinum is expected to record a modest supply deficit this year, while palladium is projected to remain in a slight surplus. A key source of volatility is China’s rapid transition toward electric vehicles, which reduces demand for internal combustion engine vehicles that rely heavily on platinum-group metals in catalytic converters.
Electric vehicles are expected to account for roughly 40% of China’s light-vehicle production this year, surpassing conventional combustion-engine vehicles for the first time. Traditional vehicles are projected to represent 36% of production, while hybrids are expected to account for 24%.
Production of internal combustion engine vehicles in China has already fallen to approximately 14 million units in 2025, down from 21 million in 2020. By contrast, the transition to electric vehicles remains slower in Europe and the United States, particularly after Washington scaled back some earlier electrification initiatives.
Platinum jewelry demand has also weakened, especially in China. Elevated inventories built up during the manufacturing boom of mid-2025 continue to pressure the market, and although some stock has already been recycled, retailers still hold large inventories.
With consumer demand remaining soft, Bank of America warned that volumes of Chinese platinum jewelry manufacturing could contract significantly this year. That weakness adds another challenge for platinum at a time when industrial demand is already under pressure from slowing global growth.
Despite uncertainty over demand, Bank of America said supply-side risks could become increasingly important, particularly in South Africa, one of the world’s largest producers of platinum-group metals.
The bank noted that tensions in the Middle East, higher energy prices, and inflationary pressures could raise production costs. South Africa relies heavily on imported oil, has limited domestic refining capacity, and continues to face electricity shortages, leaving its mining sector highly exposed to rising fuel and power costs.
Diesel remains widely used across mining operations, transportation networks, and backup power generation. Diesel prices have risen since the conflict began, while state utility Eskom increased electricity tariffs by 8.76% beginning in April 2026, adding further pressure on miners.
Sibanye-Stillwater reported a 13% year-over-year increase in unit operating costs during the first quarter, citing persistent inflationary pressures, including higher labor and energy expenses.
For now, palladium’s recovery is being supported by lower yields, short covering, and improved commodity sentiment following the drop in oil prices. However, the market remains caught between weak near-term demand, major structural changes in the auto industry, and growing supply-side risks that could shape prices over the coming quarters.
