Palladium hovered around $1,270 per ounce, trading close to its lowest level since late September as fading geopolitical risk premiums and weaker energy markets weighed on sentiment. Reports of significant progress in negotiations between the US and Iran toward a longer-term agreement have helped ease fears of severe supply disruptions along key shipping routes, even though tensions remain elevated due to the conflict in Lebanon involving Israel and Hezbollah.
Softer crude oil prices have reduced inflationary pressures and tempered concerns about additional energy-driven monetary tightening. However, expectations that interest rates will stay higher for longer continue to pressure non-yielding assets such as palladium. Market sentiment is further dampened by forecasts of a surplus across the platinum-group metals complex.
On the demand side, structural changes in China’s automotive sector present additional headwinds. Electric vehicles are rapidly increasing their market share, eroding long-term demand expectations for palladium used in catalytic converters for traditional internal combustion engine vehicles.