Key Moments
- UBS raised its palladium price forecast by $300 per ounce to $1,800, pointing to stronger investment inflows.
- The bank says current price strength reflects investor positioning on rates, the dollar, and geopolitics rather than industrial demand.
- UBS adds that palladium’s growing discount to platinum could prompt autocatalyst makers to increase usage over time.
UBS Revises Palladium Target Higher
UBS told clients on Friday that it has lifted its palladium price forecast by $300 per ounce to $1,800. The bank said rising investment demand drove the upgrade.
Analyst Giovanni Staunovo noted that solid inflows have supported prices in recent months. He also highlighted that palladium’s small market size often leads to sharp price swings.
Investment Demand Overtakes Industrial Drivers
According to UBS, recent gains in palladium prices stem mainly from financial positioning rather than industrial use. In particular, investors have positioned for lower U.S. interest rates, a weaker dollar, and ongoing geopolitical risks.
However, Staunovo cautioned that prices depend heavily on investment flows. If demand fades, he expects the market to remain broadly balanced. For this reason, UBS currently prefers gold as an investment.
Structural Shifts in Palladium Demand
UBS also pointed to major changes in palladium demand over recent years. Autocatalyst use peaked in 2019, when palladium prices rose above platinum and encouraged substitution.
At the same time, growing adoption of electric vehicles has weighed on demand. Unlike traditional cars, EVs do not require autocatalysts.
Price Dynamics and Substitution Outlook
Since mid-2025, palladium has rallied alongside platinum and silver. Importantly, palladium now trades well below platinum. As a result, UBS expects autocatalyst producers to shift back toward palladium over time.
| Metal | Recent Trend (per UBS) | Relative Position |
|---|---|---|
| Palladium | Rallied since mid-2025 | Trades at a discount to platinum |
| Platinum | Rallied since mid-2025 | More expensive than palladium |
| Silver | Rallied since mid-2025 | Moves broadly with precious metals |
Rising ETF and Futures Activity
UBS also flagged growing investor participation in palladium markets. ETF holdings began to rise in mid-2025. Meanwhile, speculative futures positions have rebounded after staying net short for much of last year.
China’s Role in Platinum-Group Metals Trading
Finally, Staunovo highlighted China as a potential support factor. He said new yuan-denominated platinum futures in Guangzhou have likely boosted trading activity across platinum-group metals, including palladium.
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