Palladium futures have recently dipped to approximately $1,590 per ounce, following a three-year peak at $2,022 on December 29. This decline comes as investors secured profits after a significant year-end surge. Despite this decrease, the metal is expected to achieve an impressive annual increase of about 77% in 2025, marking its most substantial gain in nearly 15 years. This anticipated growth is driven by expectations of limited supply coupled with strong demand. According to the World Platinum Investment Council, the palladium market is predicted to experience a supply-demand gap throughout the year.
On the demand front, the European Union’s adjustments to the anticipated 2035 ban on internal combustion engines have prolonged the industrial use of palladium in automotive catalytic converters. Furthermore, the United States has recognized palladium as a critical mineral, prompting industrial users and investors to bolster their defensive stock levels. In addition, sanctions imposed on Russia and global trade uncertainties have enhanced palladium’s attractiveness as a safe-haven asset, while China's newly introduced futures market has increased liquidity, attracting both speculative and strategic investors.