Palladium prices declined during Tuesday’s trading, pressured by profit-taking after gaining more than 3% in the previous session, driven by continued positive expectations for strong demand for the industrial metal this year.

Amid sustained strength in platinum group metals (PGMs) demand, BofA Securities’ Global Research division raised its 2026 price forecast for platinum to $2,450 per ounce from a previous estimate of $1,825, and lifted its palladium forecast to $1,725 per ounce from $1,525.

Key takeaways from the bank’s weekly Global Metals Markets report dated January 9 showed that disruptions to PGM trade flows caused by trade disputes continue to keep markets tight, particularly the platinum market. The report also noted that Chinese platinum imports are providing additional price support.

While a supply response is likely, the bank expects it to be gradual, citing what it described as “production discipline and inelastic mine supply.”

These forecasts come as platinum and palladium prices continue to rise this year, with spot prices reaching $2,446 per ounce for platinum and $1,826 per ounce for palladium.

As a result, both metals have exceeded the bank’s previous forecasts, prompting an upward revision to price estimates.

The bank said in comments to Mining Weekly that it continues to expect platinum to outperform palladium, supported by persistent market deficits.

It added that US tariffs have had a clear impact on several metals markets, and that the risk of additional tariffs continues to hang over PGMs.

This has been one of the factors behind rising inventories at the Chicago Mercantile Exchange, alongside a surge in exchange-for-physical (EFP) transactions.

Palladium EFP activity has been particularly strong, driven largely by growing concerns that the United States could impose tariffs on Russian palladium, amid ongoing anti-dumping and countervailing duty investigations.

In this context, the bank noted that the US Department of Commerce has estimated dumping margins for unwrought Russian palladium at around 828%.

It added that the imposition of tariffs on currently undisclosed Russian volumes could push domestic prices higher, given Russia’s role as a key palladium supplier.

Chinese import demand adds further price support

Outside the United States, China has provided additional support for prices. Early in 2025, a sharp recovery in jewelry-sector activity attracted more ounces into the Chinese market. With gold prices at record highs, this development is particularly significant, as substituting just 1% of gold jewelry demand could widen the platinum deficit by around one million ounces, equivalent to roughly 10% of total supply.

In the second half of 2025, the launch of physically backed platinum and palladium futures contracts on the Guangzhou Futures Exchange (GFEX) also provided additional price support.

These contracts represent China’s first domestic hedging tools for PGMs, are denominated in renminbi, and allow for physical delivery of both bars and sponge. The bank said that access to physical liquidity was a key driver behind the December price rally.

China’s palladium imports have also quadrupled since September compared with last year, a move the bank described as difficult to justify on fundamental grounds given the ongoing phase-out of internal combustion engines. It suggested the surge is largely linked to the launch of palladium futures contracts on GFEX.

Gradual supply response expected

With PGM prices now trading above marginal production costs and incentive price levels, markets are closely watching for a supply response.

The bank said it expects any response to be measured, noting that producer margins — particularly in South Africa and North America — have been under sustained pressure over the past two years, which may encourage caution when expanding output.

New supply additions are also likely to emerge only gradually, reflecting the long lead times required to move from development to stable production levels.

Many ongoing projects represent incremental expansions or phased output increases, rather than sources of rapid and large-scale supply growth.

On the supply side, production issues in South Africa tightened the platinum market in 2025. Mine output in the country fell by around 5% year-on-year between January and October 2025, mainly due to operational problems such as flooding and plant maintenance in the first quarter. The bank expects a modest recovery in South African platinum production this year, but not enough to eliminate the market deficit.

In Russia, the world’s largest palladium supplier, production has also faced challenges, as Norilsk Nickel transitioned to new mining equipment and dealt with changes in ore grades. As a result, the company’s platinum output fell 7% year-on-year and palladium output declined 6% in the first nine months of 2025. As these temporary disruptions ease, Russian PGM production is expected to recover this year, potentially limiting the pace of further palladium price gains.

While higher prices could incentivize additional supply, the bank believes incremental increases are more likely to come from mine life extensions and project restarts rather than rapid, large-scale capacity expansions.

In practice, most new supply requires several years to move from construction to full production, and many projects currently under development are expansions or phased increases, not immediate sources of large additional volumes.

The bank noted that two major new projects moving toward production — Ivanhoe Mines’ Platreef project and Wesizwe’s Bakubung project in South Africa — are expected to add a combined 150,000 ounces of platinum and 100,000 ounces of palladium this year.

Other expansion projects remain longer-term and dependent on final investment decisions. Among them is Valterra Platinum’s Sandsloot underground project at the Mogalakwena mine, where an investment decision is not expected before 2027, with underground ore extraction potentially starting after 2030.

In trading, March palladium futures were down 0.7% at $1,926.5 per ounce at 15:45 GMT.

Bitcoin edged slightly lower during Asian trading on Tuesday, underperforming equity market gains, as caution ahead of key US inflation data and rising global geopolitical tensions kept traders away from high-risk assets.

The world’s largest cryptocurrency slipped 0.2% to $91,894.6 by 00:33 ET (05:33 GMT).

Bitcoin has struggled to generate meaningful gains since late 2025 and into early 2026, amid broadly subdued sentiment across cryptocurrency markets. Increased investor focus on artificial intelligence and technology stocks has also diverted liquidity away from the digital asset space.

Inflation data in focus as rate outlook and Fed uncertainty persist

Market attention on Tuesday was squarely focused on the US Consumer Price Index for December, due later in the day.

The data are expected to show headline inflation holding steady at 2.7% year-on-year, while core inflation is forecast to tick slightly higher.

Any signs that inflationary pressures remain sticky could further reduce the Federal Reserve’s incentive to cut interest rates in the coming months.

The Federal Reserve has also remained a major source of market uncertainty after Chair Jerome Powell revealed earlier this week that he had received threats of legal action from the US Department of Justice.

Powell said that while the threats were formally linked to renovation work at the Federal Reserve’s headquarters, he believed they were intended to pressure the central bank into responding to Washington’s demands for interest-rate cuts.

His remarks raised fresh concerns over the Fed’s independence, particularly as US President Donald Trump prepares to announce his nominee to succeed Powell. Trump has repeatedly pressured the Fed to cut rates and has publicly criticized Powell for resisting those demands.

Cryptocurrency prices today: Altcoins fluctuate as geopolitics weigh on sentiment

Other cryptocurrency prices moved modestly lower in line with Bitcoin, as appetite for speculative assets remained weak amid escalating geopolitical tensions.

Rising unrest in Iran, coupled with fears of potential US intervention, unsettled markets and pushed oil prices higher. In Asia, the diplomatic standoff between China and Japan showed no signs of easing.

These factors kept investors anchored in safe-haven assets such as gold, while technology stocks received additional support from continued optimism surrounding artificial intelligence.

AI has also played a key role in weakening the historical correlation between cryptocurrencies and tech stocks, with equities significantly outperforming Bitcoin in 2025.

Among other digital assets, Ether, the second-largest cryptocurrency, fell 0.7% to $3,136.69. XRP declined 0.7%, while Binance Coin (BNB) rose 0.2%.

Oil prices extended gains on Tuesday, as rising concerns surrounding Iran — a major producer — and the risk of supply disruptions outweighed expectations of increased crude output from Venezuela.

Brent crude futures jumped $1.20, or 1.9%, to $65.07 a barrel by 11:50 GMT, trading near their highest levels since mid-November. US West Texas Intermediate crude rose $1.23, or about 2.1%, to $60.73 a barrel.

John Evans, analyst at PVM Oil Associates, said the oil market is “building a layer of price protection against geopolitical risk,” citing the potential removal of Iranian exports, instability in Venezuela, talks surrounding the Russia–Ukraine war, and tensions related to Greenland.

Iran, one of OPEC’s largest producers, is facing its biggest wave of anti-government protests in years. The government crackdown on demonstrators — which a rights group said resulted in hundreds killed and thousands arrested — has prompted warnings from US President Donald Trump about possible military action.

Trump said on Monday that any country trading with Iran would face a 25% tariff on all business conducted with the United States. Iran exports a significant portion of its oil to China.

In a separate development, four oil tankers operated by Greek companies were attacked by unidentified drones on Tuesday. The vessels were in the Black Sea en route to load crude from the Caspian Pipeline Consortium (CPC) terminal off the Russian coast, according to eight sources.

Janiv Shah, analyst at Rystad Energy, said concerns about oversupply have temporarily faded into the background, adding that refinery run rates in Europe were operating above seasonal norms, tightening the gasoil (diesel) market.

Disruptions lift Brent risk premium

Data showed that Brent’s premium over Middle East benchmark Dubai crude rose on Tuesday to its highest level since July, driven by geopolitical tensions in Iran and Venezuela, reinforcing Brent’s role as a global pricing benchmark.

Barclays said in a note that “the unrest in Iran has, in our view, added a geopolitical risk premium of around $3 to $4 per barrel to oil prices.”

At the same time, markets are factoring in the possibility of additional crude supplies entering the market as Venezuelan exports resume.

Following the removal of President Nicolas Maduro, Trump said last week that Caracas is preparing to deliver up to 50 million barrels of oil to the United States — volumes currently subject to Western sanctions.

Global oil trading firms have emerged as early winners in the race to secure Venezuelan oil flows, moving ahead of major US energy companies.

The Japanese yen fell to its weakest level against the US dollar since July 2024 on Tuesday, as traders positioned ahead of an expected Japanese election, while the currency also hit record lows against several European currencies, at a time when the dollar itself remains under pressure from concerns over the independence of the Federal Reserve.

Analysts said those concerns — which erupted after the administration of US President Donald Trump opened a criminal investigation into Fed Chair Jerome Powell — continue to represent the most important long-term risk factor for markets.

However, with the administration’s move facing criticism from prominent figures within the Republican Party itself, its impact on day-to-day price action has so far been limited.

Instead, the Japanese yen became the main market driver, briefly weakening beyond the 159 level per dollar, its softest since July 2024.

The move followed a report by Kyodo News stating that Japanese Prime Minister Sanae Takaichi had told a senior ruling-party executive that she intends to dissolve the lower house of parliament at the start of the regular Diet session scheduled for January 23.

In the latest trading, the dollar rose 0.5% against the yen to 158.9.

An election victory could further boost the “Takaichi trade”

Takaichi has been leading opinion polls, and a decisive election victory could reinforce what is known as the “Takaichi trade” — a market view that her preference for greater fiscal stimulus would lift equities, push bond yields higher, and weaken the yen.

That scenario played out in Tuesday’s trading, with Japan’s Nikkei stock index hitting a fresh record high, while yields on 30-year Japanese government bonds jumped by around 12 basis points.

The yen also fell to record lows against both the euro and the Swiss franc, and slid to its weakest level versus sterling since August 2008.

Will Japan intervene to halt the yen’s slide?

For currency traders, the key question remains whether — and when — Japanese authorities might step in directly to curb the yen’s decline.

Nick Rees, head of macro research at Monex Europe, said that “160 yen to the dollar is the obvious next level, although the yen could fall further — it’s less about specific levels and more about the speed of the move.”

He added that focusing on price levels can help “anchor market psychology.”

Japan’s Finance Minister Satsuki Katayama previously said that she and US Treasury Secretary Scott Bessent share concerns about the yen’s recent weakness, as Tokyo has stepped up warnings about possible intervention to stem the currency’s fall.

Powell investigation unsettles investors

Other currencies were largely steady, holding on to gains from the previous session.

The euro was little changed at $1.1671 after rising 0.27% in the prior session, while sterling gained 0.14% to $1.3475, extending Monday’s 0.47% advance.

The Swiss franc was steady at 0.7976 per dollar, while the dollar index edged up slightly to 99.01 after posting its worst daily performance in three weeks in the previous session.

Later in the day, US consumer price index data is expected to drive further dollar moves.

Consumer inflation is forecast to have accelerated in December, as some temporary disinflation effects linked to the November government shutdown faded. However, uncertainty over the shutdown’s impact means the data could deliver surprises.

That could add to volatility in the dollar, which is already being buffeted by speculation around the Federal Reserve and broader political developments this year, despite the absence of a clear directional trend.

“I would have expected, given everything going on, to see a clearer trend,” Rees said.

“But you could argue that forces are pulling in opposite directions — the Federal Reserve is a negative factor for the dollar, yet for now markets still view the dollar as a safe haven amid geopolitical developments.”