FX.co ★ Palladium Retreats Amid Profit-Taking

Palladium futures have dipped below $1,900 per ounce, retreating from a recent high of $1,958, as investors have decided to cash in on their profits. Despite this decline, palladium prices remain close to a three-year high, bolstered by increasing expectations of interest rate cuts by the Federal Reserve and a steady demand for safe-haven assets. The inflation rate in the United States for December was recorded at a moderate 2.7% year-on-year, alleviating some worries about escalating price pressures. This has led markets to anticipate two 25 basis point rate cuts within the year. Concerns over the Federal Reserve's autonomy have intensified following an announcement that Chair Jerome Powell is under a criminal investigation by the U.S. Department of Justice, which is perceived as exerting pressure on the central bank. Meanwhile, geopolitical risks are escalating, with investors keeping a close eye on the harsh crackdowns on protesters in Iran, potential U.S. military interventions, and a proposed 25% tariff on any nation engaging in trade with Iran. On the supply and demand front, the palladium market is anticipated to transition from a supply deficit to a surplus by 2026, while demand stays robust, bolstered by the European Union's decision to ease its ban on internal combustion engine vehicles by 2035.