Palladium Rises to Over 2-Year High

Palladium futures fell below $1,000 an ounce, remaining at its lowest level since June 2025, amid persistent investment outflows and a bearish long-term demand outlook. Traders have lowered price forecasts as demand cools and prospects for the auto sector weaken. Despite the Fed holding rates steady at its latest meeting, markets are widely pricing in another hike by year-end as surging energy costs linked to the Middle East conflict fuel inflation concerns. Higher rates put downward pressure in investment demand for the non-yielding metal. Meanwhile, the auto sector, which accounts for over 80% of palladium demand, faces pressure from rapid EV adoption, weak vehicle sales and tighter consumer spending amid the conflict. Still, a modest recovery is expected in 2027 amid stable hybrid-catalyst driven demand. Constrained output from Russia, the world's largest palladium producer, offers some support, with Nornickel warning that an overhaul at one of its plants could extend into 2028.

Palladium futures extended its decline to below $1,100 an ounce and reaching its lowest level since June 2025, weighed by persistent investment outflows and a bearish long-term demand outlook. A prolonged Middle East conflict has driven global energy prices higher as risk premiums rise, fueling inflation and strengthening expectations of hawkish central bank decisions across economies. Over the longer term, higher rates could exert greater downward pressure in investment demand for the metal that carries no yield. Higher borrowing costs and fuel prices also weigh on automotive demand, while the shift towards platinum in catalytic converters adds to long-term demand concerns. However, resilient hybrid demand has helped cushion the decline. Meanwhile, the lack of major disruptions in key producing countries and steady recycling flows eased concerns about shortages. Market sentiment is also undermined by a projected surplus in the platinum group metals complex.

Palladium decreased to 1080.00 USD/t.oz, the lowest since September 2025. Over the past 4 weeks, Palladium lost 17.27%, and in the last 12 months, it decreased 26.65%.