Palladium Drops Further to a 16-Month Low

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, fuelling 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, although 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%.

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.