Palladium declines ahead of US-Russia talks

Palladium prices fell on Tuesday as markets closely watched the talks to be held later this week between the Presidents of the United States and Russia.

US President Donald Trump and Russian President Vladimir Putin will meet in direct talks on Friday in the US state of Alaska to discuss ending the war in Ukraine.

UBS this week raised its palladium price forecasts by $100 per ounce across all timeframes, citing expectations of lower output from Canadian mines.

However, the banking group still maintains a bearish outlook on the metal due to weak demand from the automotive sector.

UBS said in a note to clients: “After platinum, palladium is the second-best performing precious metal this year, having risen by 37%.” It added that “concerns about supply disruptions and short covering activity may have contributed to the rise in the metal’s price.”

Bank analysts highlighted a rally driven by short covering in the futures markets, as non-commercial short positions fell from 1.9 million ounces in April to 1.1 million ounces, while long positions rose slightly to more than 0.9 million ounces.

They explained: “Positions remain in a slightly net short position, far from the extreme short level that approached 1.1 million ounces.”

The bank also pointed out that geopolitical risks and supply factors are contributing to increased price volatility, noting that “US President Donald Trump threatened to impose secondary tariffs on buyers of goods coming from Russia,” the world’s largest producer of palladium.

Concerns have also grown about potential tariffs on South Africa, the second-largest producer, according to the bank.

At the same time, analysts noted that Implats Canada announced plans to halt production at the Lac des Iles mine by May 2026, which currently supplies the market with about 0.2–0.25 million ounces annually.

Despite these supply concerns, UBS warned that palladium remains a high-risk asset, saying: “Only investors with a high risk tolerance should consider trading palladium, given its low trading volume and small market size.”

The group expects challenges to persist, noting that “more than 80% of demand for palladium comes from its use in gasoline-powered vehicles,” while US auto production remains under pressure from tariffs.

On the other hand, the US dollar index fell by 0.5% to 98.05 points at 16:35 GMT, after recording a high of 98.6 points and a low of 98.1 points.

In trading, palladium futures for September delivery fell by 1.6% to $1,140.5 per ounce at 16:35 GMT.