Palladium traded around $1,260 per ounce, retreating from recent gains as rising tensions between the US and Iran pushed oil prices higher and reinforced expectations that the Federal Reserve will keep interest rates elevated. Brent crude held near its highest level in more than a month after Iran’s Revolutionary Guards claimed strikes on US military assets across the Middle East, while Yemen’s Iran-aligned Houthi movement announced a naval blockade of Saudi Arabia, intensifying inflation concerns.
Higher US Treasury yields and mounting expectations of another Fed rate hike further weighed on the broader precious metals complex, with traders raising the implied probability of a December increase to 83%, up from 73% a week earlier. Downside in palladium was limited, however, by forecasts of another annual market deficit, as South African mine output remains constrained by high operating costs, including elevated electricity tariffs. Even so, palladium has fallen 22.81% so far this year.