Palladium Hits 12-month Low

Palladium futures traded around $1,120 an ounce, extending their decline since September to a more than one-year low amid persistent investment outflows and a bearish long-term outlook. Strong US inflation strenghened the case for the Fed to keep borrowing costs elevated for longer, raising concerns over capital-intensive sectors, namely the AI buildout, and providing some support as investors seek shelter. Over the longer term, however, higher rates could exert greater downward pressure in demand for the metal that carries no yield. Additionally, the growing adoption of EVs continues to pressure demand for palladium used in catalytic converters, although resilient demand for hybrids has helped moderate the decline. Despite this, the drop in demand continues to underpin a bearish outlook for the metal as it outpaces the contraction in supply, with elevated operating costs and power grid instability in South Africa, alongside ongoing trade risks in Russia, constraining production.

Palladium futures traded below $1,200 an ounce, remaining near its lowest level since September 2025, as both near and longer term outlooks remain subdued. Short-term investment flows take some support from cautious traders while awaiting further clues on the impact of elevated oil prices on inflation and the pace of monetary policy tightening. While markets widely expect the Fed to leave interest rates unchanged this month, however, the prospect of a rate hike by year-end could weigh on demand for the metal. Over the longer term, the growing adoption of electric vehicles continues to pressure demand for palladium used in catalytic converters, although resilient demand for hybrids has helped moderate the decline. Despite this, the drop in demand continues to underpin a bearish outlook for the metal as it outpaces the contraction in supply, with elevated operating costs and power grid instability in South Africa, alongside ongoing trade risks in Russia, constraining production.

Palladium decreased 5.15% to 1114 USD/t.oz