Palladium prices rose during Monday’s trading, extending strong gains amid expectations of stronger demand, alongside a weaker US dollar against most major currencies, which eased pressure on commodities and metals.

With demand for platinum group metals (PGMs) remaining robust, the global research team at Bank of America Securities raised its 2026 price forecasts for platinum to $2,450 per ounce, up 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 flows stemming from 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 expected, the bank said it is likely to be gradual, citing “production discipline and inflexible mine supply.”

These forecasts come as platinum and palladium prices continue to climb 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 projections, prompting an upward revision to its price outlook.

In comments to Mining Weekly, the bank said: “We continue to expect platinum to outperform palladium, supported by persistent market deficits.”

The bank added that US tariffs have had a visible impact on several metals markets, while the risk of further tariffs continues to loom 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 over the potential imposition of US 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 the dumping margin for unworked Russian palladium at around 828%.

The bank added that any tariffs imposed on undeclared Russian volumes could push domestic prices higher, given Russia’s status as a key global supplier of palladium.

Chinese import demand adds price support

Outside the United States, China has provided further support to prices. Early in 2025, a sharp recovery in jewellery sector activity attracted additional ounces into the Chinese market. With gold prices at record highs, this development is particularly significant, as substituting just 1% of gold jewellery demand could increase the platinum deficit by around one million ounces, equivalent to nearly 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) provided further price support.

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

China’s palladium imports have also quadrupled since September compared with a year earlier, a move the bank described as difficult to explain on a purely fundamental basis given the gradual phase-out of internal combustion engines. It suggested that the increase is largely linked to the launch of palladium futures contracts on the Guangzhou exchange.

Gradual supply response expected

With PGM prices currently trading above marginal production costs and incentive prices for investment, the prospect of a supply response has come into focus.

The bank said: “We expect any response to be measured. Producer margins — particularly in South Africa and North America — have been under sustained pressure over the past two years, which may lead companies to be cautious when expanding output.”

As for new supply, any increases are likely to materialise only gradually, given 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, large-scale supply growth.

On the supply side, production issues in South Africa tightened the platinum market during 2025. Mine output in the country fell by around 5% year-on-year between January and October 2025, mainly due to operational challenges 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, output also faced challenges as Norilsk Nickel transitioned to new mining equipment and processed changes in ore composition. As a result, the company’s platinum production fell 7% and palladium output declined 6% year-on-year in the first nine months of 2025. As these temporary disruptions fade, Russian PGM production is expected to recover this year, potentially moderating the pace of palladium price gains.

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

In practice, most new supply requires several years to move from construction to full production, and many projects currently under development are incremental or phased expansions rather than immediate sources of significant new volumes.

The bank noted that two major new projects approaching 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 during the current year.

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

Meanwhile, the US dollar index fell 0.7% by 16:08 GMT to 96.8 points, after recording a high of 97.3 and a low of 96.8.

In trading, March palladium futures jumped 6.1% by 16:08 GMT to $2,151.5 per ounce.

Bitcoin hovered near a one-month low on Monday, extending the sharp losses recorded last week, as investors remained cautious ahead of the Federal Reserve’s monetary policy meeting and following a broad wave of liquidations across leveraged cryptocurrency markets.

The world’s largest cryptocurrency was trading down 0.2% at $80,185.6 as of 03:05 a.m. US Eastern Time (08:05 GMT).

Bitcoin fell more than 6% last week amid a broader risk-off move across global financial markets, driven by rising uncertainty over global monetary policy, sharp volatility in foreign exchange markets, and fluctuations in US Treasury yields.

Liquidations and Fed caution weigh on crypto markets

The selloff intensified last week due to forced liquidations in derivatives markets, as highly leveraged positions were unwound at a rapid pace.

According to market data, leveraged cryptocurrency positions worth more than $1 billion were liquidated during the recent turbulence, with long Bitcoin bets accounting for the largest share of losses. Such liquidations typically amplify price declines, as positions are automatically closed, adding further downward momentum.

Bitcoin had rallied strongly earlier this year, supported by expectations of US monetary easing and continued inflows into spot exchange-traded products. However, sentiment turned more cautious as investors reassessed the outlook for interest rates and reduced exposure to high-risk assets, amid sharp moves in currency and bond markets.

Market focus has now shifted squarely to the Federal Reserve’s two-day policy meeting, which concludes on Wednesday. The Fed is widely expected to keep interest rates unchanged, but traders will closely monitor comments from Chair Jerome Powell for signals on the timing and scale of any potential rate cuts later this year.

Investors are also watching for guidance on liquidity conditions and the Federal Reserve’s balance sheet, both of which are viewed as key drivers of cryptocurrency market performance.

Adding to uncertainty, traders are awaiting an anticipated announcement by US President Donald Trump regarding his nominee for the next Federal Reserve chair. The appointment is seen as potentially influential for future monetary policy direction, particularly if the new leadership is perceived as more dovish or more aligned with the administration’s economic priorities.

Cryptocurrency prices today: altcoins extend losses

Most major altcoins also declined on Monday, extending losses amid persistent market caution.

Ethereum, the world’s second-largest cryptocurrency, fell 1.5% to $2,897.92.

XRP slipped 0.8% to $1.88.

Oil prices steadied on Monday after jumping more than 2% in the previous session, as disruptions to US crude output and rising tensions between the United States and Iran were offset by easing European supply concerns.

Brent crude futures slipped 7 cents, or 0.1%, to $65.81 a barrel by 12:51 GMT. US West Texas Intermediate crude fell 13 cents, or 0.2%, to $60.94 a barrel.

Both benchmarks posted weekly gains of about 2.7% at Friday’s close, reaching their highest levels since January 14.

Kazakhstan’s energy ministry said on Monday that the country was preparing to resume output at its largest oil fields, although industry sources said production levels remained low and that force majeure on exports of CPC Blend crude was still in place.

The Caspian Pipeline Consortium (CPC), which operates Kazakhstan’s main export route, said on Sunday that its Black Sea export terminal had returned to full loading capacity after maintenance work was completed on one of its three mooring points.

Priyanka Sachdeva, senior market analyst at Phillip Nova, said a winter storm had hit the US Gulf Coast, forcing shutdowns at wells in key oil and natural gas producing regions and putting additional strain on the power grid. She added that oil markets were seeing modest support as the outages tightened physical supply flows.

Analysts at JPMorgan said on Monday that around 250,000 barrels per day of US crude production had been lost due to severe weather, including disruptions in the Bakken field in Oklahoma and parts of Texas.

Traders also remained cautious about geopolitical risks, with tensions between the United States and Iran keeping investors on edge.

US President Donald Trump said last week that the United States had a “naval fleet” heading toward Iran, although he said he hoped it would not need to be used, while reiterating warnings to Tehran over killing protesters or restarting its nuclear programme.

A research note from SEB on Monday said that extremely cold US winter weather, higher heating fuel demand and the risk of US supply disruptions had contributed to the upside seen late last week, but added that US threats toward Iran — alongside the deployment of the USS Abraham Lincoln aircraft carrier to the Middle East — were likely the more important driver.

A senior Iranian official said on Friday that Iran would treat any attack as “a full-scale war against us”.

Meanwhile, three delegates from OPEC+ told Reuters that the group is expected to keep its oil output increases on hold for March at a meeting scheduled for Sunday.

The British pound climbed to a four-month high against a weakening US dollar on Monday, extending gains from last week after strong domestic data lifted the UK currency.

Data released on Friday showed that British companies recorded the fastest improvement in business activity since April 2024 in January, while retail sales rose unexpectedly last month, strengthening signs of an improving economic backdrop.

This helped push sterling up by 2% last week, marking its biggest weekly gain since March last year, even as the dollar broadly fell by a similar magnitude.

Sterling was last up 0.2% against the dollar at $1.3675, its highest level since September 17.

Dominic Bunning, head of G10 FX strategy at Nomura, said: “Cable will be driven much more by US developments than by what happens in the UK.”

The dollar index, which measures the US currency against six peers including sterling, fell 1.9% last week, its largest weekly decline since April, as investors returned to a “sell America” trade following US President Donald Trump’s threats to impose tariffs on European allies over the Greenland issue.

Against the euro, sterling slipped about 0.1% to 86.79 pence.

The pound also fell 1% to 210.17 Japanese yen, amid broad strength in the Japanese currency as speculation grew over coordinated intervention in currency markets by Japanese and US authorities to support the yen.

Nomura’s Bunning sees sterling potentially continuing to weaken against the euro, given the challenges facing the UK economy.

“We think base effects will drive inflation below target by the April reading,” he said.

“We expect the pace of disinflation to show through in headline rates over the coming months, which could create a risk that the Bank of England cuts rates more than markets currently price.”

The Bank of England is due to meet next week, though it is widely expected to keep interest rates unchanged.

Money markets are currently pricing in around 36 basis points of easing by year-end, implying one quarter-point rate cut and about a 45% chance of a second.

Sterling also remains sensitive to large swings in government bond yields, which edged lower on Monday after the Labour Party blocked Manchester Mayor Andy Burnham from returning to parliament, where he is seen as a potential rival to Prime Minister Keir Starmer.

The yield on the benchmark 10-year UK government bond fell by around 3 basis points to 4.49%.