While markets have been focused on the recent sharp decline in gold prices, the broader precious metals sector has also experienced significant selling pressure, with platinum-group metals suffering some of the steepest losses, according to a report from Bank of America.

Both platinum and palladium recently fell to their lowest levels of the year amid continued pressure from the global economic slowdown and geopolitical tensions.

Global economic weakness and Middle East tensions weigh on platinum-group metals

Commodity analysts at the bank said the rally in platinum-group metals lost momentum since late January, largely due to gold’s price action and persistent economic headwinds linked to the conflict in the Middle East, which continue to weigh on industrial metals demand.

Despite the recent weakness, the bank maintained its positive long-term outlook for the sector, noting that it remains constructive on gold heading into the fourth quarter. A renewed gold rally could attract investors back into platinum-group metals and help support prices.

Spot platinum fell to around $1,711 per ounce, down more than 2% during the session, while palladium traded near $1,203 per ounce, up roughly 0.5%.

Since the sharp selloff on Friday, platinum has lost more than 9% of its value, while palladium has fallen over 6%.

Higher price targets despite weak industrial and jewelry demand

Despite current pressures, Bank of America still expects platinum to average around $3,000 per ounce by the fourth quarter of 2026 through the first half of 2027.

Palladium is expected to average around $2,200 per ounce during the final three months of the year.

Platinum-group metals delivered strong gains during 2025 as global trade tensions and threats of tariffs on precious metals created significant disruptions in physical market liquidity.

However, analysts noted that most of those concerns eased after tariff threats failed to translate into broad implementation.

According to the report, the absence of tariffs resulted in more than 200,000 ounces of platinum leaving NYMEX warehouses, roughly half of the inflows recorded during the second half of 2025.

Palladium, meanwhile, saw outflows in late January before flows reversed after the US Department of Commerce imposed final anti-dumping duties of 133% and countervailing duties of 109% on Russian palladium.

Structural shifts in demand

The bank also highlighted structural changes in demand for platinum-group metals.

Platinum is expected to record a modest supply deficit this year, while palladium is forecast to remain in a slight surplus.

Analysts pointed to China’s accelerating transition toward electric vehicles as a major source of market volatility, given the reduced demand for internal combustion engine vehicles that rely heavily on platinum-group metals in catalytic converters.

Electric vehicles are expected to account for roughly 40% of China’s light-vehicle production this year, surpassing conventional combustion-engine vehicles for the first time. Traditional vehicles are projected to represent 36% of production, while hybrids account for 24%.

Production of internal combustion vehicles in China has already fallen to approximately 14 million units in 2025, down from 21 million in 2020.

By contrast, the transition to electric vehicles remains slower in Europe and the United States, particularly after Washington scaled back some of its earlier electrification initiatives.

Weak jewelry demand in China

Demand for platinum jewelry has also slowed, especially in China, where elevated inventories accumulated during the manufacturing boom of mid-2025 continue to pressure the market.

Although some of those inventories have already been recycled, retailers still hold large stockpiles while consumer demand remains weak, raising the risk of a significant contraction in Chinese jewelry manufacturing volumes this year.

Energy costs threaten South African production

Despite uncertainty surrounding global demand, Bank of America believes supply-side risks could become increasingly important.

The bank noted that ongoing Middle East tensions, higher energy prices, and inflationary pressures could negatively affect production, particularly in South Africa, one of the world's largest producers of platinum-group metals.

South Africa relies heavily on imported oil, has limited domestic production capacity, and faces ongoing refining constraints, leaving its mining sector highly exposed to rising fuel costs.

Diesel remains widely used across mining operations, transportation networks, and backup power generation, especially given the country's persistent electricity shortages.

Diesel prices have surged since the conflict began, while state utility Eskom raised electricity tariffs by 8.76% beginning in April 2026, significantly increasing mining costs.

In this context, Sibanye-Stillwater reported a 13% year-over-year increase in unit operating costs during the first quarter, citing persistent inflationary pressures, including higher labor and energy expenses.

In trading on Wednesday, spot palladium rose 1.5% to $1,249 per ounce as of 16:14 GMT.

US inflation accelerated in May, supported by rising energy costs, according to data released on Wednesday, marking the largest annual increase in three years.

The US Consumer Price Index (CPI) rose 4.2% year-over-year in May, in line with market expectations and reaching its highest level in three years.

On a seasonally adjusted monthly basis, the index increased 0.5% from the previous month, also matching Dow Jones estimates.

Core inflation, which excludes the more volatile food and energy categories, showed some moderation. It rose 0.2% on a monthly basis, below expectations for a 0.3% increase.

On an annual basis, core inflation came in at 2.9%, matching analysts’ forecasts but remaining above the Federal Reserve’s 2% target.

The data suggests inflationary pressures remain present in the US economy, particularly as higher energy prices linked to geopolitical tensions in the Middle East continue to feed into broader price trends. This could encourage the Federal Reserve to maintain a restrictive monetary policy stance for longer.

Following the release, US stock futures remained in negative territory, while Treasury yields were little changed, reflecting continued investor caution regarding the outlook for interest rates and US monetary policy.

US Consumer Price Index data for May showed inflation rising in line with economists’ expectations, reviving concerns about the future path of US interest rates and their impact on risk-sensitive assets, particularly cryptocurrencies.

In trading, Bitcoin fell 0.1% to $62,200 as of 14:43 GMT on CoinMarketCap.

Inflation data revives rate-hike concerns and crypto market volatility

Annual inflation accelerated to 4.2%, its highest level since April 2023.

Core inflation, which excludes food and energy prices, rose to 2.9%, its highest reading in nine months and also matched market expectations.

The figures are viewed as concerning for financial markets, particularly because the Federal Reserve considers a 2% inflation rate to be its long-term target.

According to The Kobeissi Letter, expectations for future interest-rate increases have started to rise again, potentially triggering additional selling pressure in the cryptocurrency market, which remains highly volatile and sensitive to monetary policy expectations.

Despite those concerns, Bitcoin initially posted a surprise rally after the release of the data, briefly approaching the $62,000 level before retreating toward $61,500, according to TradingView data.

Most major cryptocurrencies followed a similar pattern, including Ethereum (ETH), Solana (SOL), and XRP, all of which experienced sharp swings following the inflation report.

Despite the initial rebound, markets remain highly volatile, and the short-term direction for cryptocurrencies remains unclear as investors continue to await further signals regarding US monetary policy.

Oil prices were little changed on Wednesday as investors evaluated the implications of renewed tensions between the United States and Iran, balancing weaker Chinese demand against continued drawdowns in global inventories.

In trading, Brent crude futures slipped 25 cents, or 0.23%, to $91.24 per barrel by 10:08 GMT, while US West Texas Intermediate crude fell 14 cents, or 0.16%, to $88.06 per barrel.

Prices had risen earlier in the session following the latest exchange of strikes between Washington and Tehran before retreating back toward previous closing levels.

Tamas Varga, analyst at PVM, said ongoing declines in global inventories continue to support prices, but weaker Chinese crude imports are limiting further upside, alongside continued restrictions on shipping activity through the Strait of Hormuz.

Varga added that it remains difficult to reconcile the current relative calm in oil markets with an ongoing conflict in one of the world’s most important energy-producing regions.

Geopolitical tensions restore the risk premium

US forces launched strikes against Iranian targets after President Donald Trump vowed on Tuesday to retaliate for the downing of a US Apache attack helicopter.

Priyanka Sachdeva, Senior Market Analyst at Phillip Nova, said the latest attacks have refocused traders on war-related risks and the potential for supply disruptions.

She added that the recent military exchanges have reintroduced a geopolitical risk premium into oil markets despite continuing diplomatic efforts.

Meanwhile, Tehran warned that it would resume hostilities if Israel continues its operations against the Iran-backed Hezbollah militia in Lebanon.

Israel’s refusal to end its campaign against Hezbollah has further complicated Trump’s efforts to transform the fragile ceasefire in the broader conflict involving the United States, Israel, and Iran into a lasting settlement.

Iran continues to disrupt much of the shipping traffic through the Strait of Hormuz, which normally carries around one-fifth of the world’s crude oil and liquefied natural gas supplies, while Washington maintains a blockade on Iranian ports.

US Energy Secretary said on Tuesday that vessel traffic in the Gulf and oil exports through the Strait are increasing, despite stalled negotiations between Washington and Tehran aimed at ending the conflict that has lasted for more than three months.

In the United States, data from the American Petroleum Institute, according to market sources, showed that US crude inventories declined for an eighth consecutive week last week. Gasoline inventories also fell, providing additional support for oil prices.