Palladium Falls Toward Three-Month Low

Palladium futures fell below $1,230 per ounce, approaching its lowest level in three months, as rising oil prices boosted bets on higher-for-longer interest rates and weakened investment demand. Diplomatic talks between the US and Iran over the Strait of Hormuz stalled after President Trump rejected Tehran’s proposal to reopen the critical waterway, while stating that talks would resume this week. As a result, oil prices advanced and expectations of further monetary tightening by the Federal Reserve increased, raising the opportunity cost of holding the non-yielding metal. Meanwhile, UBS forecasts a market surplus for the metal, pointing to a tighter physical market as mine production declines and automotive demand proves more resilient than expected. Persistent supply vulnerabilities in South Africa, linked to elevated operating costs and power grid instability, continue to raise concerns over mined output, while ongoing trade risks affecting Russia also weighed on the metal.

Palladium decreased to 1262.00 USD/t.oz, the lowest since August 2026. Over the past 4 weeks, Palladium lost 5.78%, and in the last 12 months, it decreased 1.48%.

Palladium futures held near $1,270 per ounce, its lowest level since early August, amid surging sovereign yields. Stronger-than-expected economic data from the Eurozone and the US raised bets of further hikes in the major economies, while underlying evidence of inflationary pressures raised concerns over the impact of persistent disruptions to energy shipments in the Middle East. Hawkish remarks from several Fed officials also increased the opportunity cost of holding non-yielding assets such as palladium. Meanwhile, UBS forecasts a market surplus for the metal, as increased recycling and weaker consumption of catalytic converters are expected to more than offset lower mining output compared with last year. Persistent supply vulnerabilities in South Africa, linked to elevated operating costs and power grid instability, continued to raise concerns over mined output, while ongoing trade and geopolitical risks affecting Russian palladium also provided a supportive backdrop for prices.