UBS lifts platinum, palladium forecasts after prices surge to multi-year highs
Investing.com -- UBS updated its platinum and palladium price forecasts after a sharp rally in both metals.
Platinum prices have surged to a 17-year high, rising by nearly $500 per ounce over the past four weeks, driven in part by investor enthusiasm following the European Commission’s plan to ease its 2035 ban on combustion engine vehicles.
The move, combined with slower-than-expected electric vehicle adoption, has fueled expectations that platinum demand in autocatalysts could remain supported for longer, UBS strategists Giovanni Staunovo and Wayne Gordon said.
They revised their platinum forecasts higher by $300 per ounce, citing “higher investment demand and a tighter market.”
The team struck a more cautious tone on the durability of platinum’s outperformance.
They noted that as platinum becomes more expensive, it increases the likelihood of demand shifting back toward palladium in gasoline vehicle catalysts.
“Should platinum stay a lot more expensive than palladium, we will likely see the car industry switching back to palladium,” the strategists said.
That substitution risk has become more relevant as palladium trades at a discount to platinum of around $250 per ounce.
Palladium itself has also rallied strongly, reaching levels last seen almost three years ago. Staunovo and Gordon said the palladium market is tighter than previously expected, supported by investment demand and supply-side frictions.
They pointed to comments from Russian producer Nornickel that high lease rates have pushed some chemical and glass companies to move from leasing to direct purchases, further tightening availability.
Excluding investment flows, the strategists cited Nornickel’s view that the palladium market is balanced this year and marginally undersupplied next year.
UBS therefore raised its palladium forecasts by $100 per ounce. The bank also flagged policy uncertainty as a source of near-term volatility, with markets awaiting the outcome of the U.S. Critical Minerals Section 232 investigation and a pending antidumping petition.
The absence of tariffs could allow palladium and platinum bars that moved into the U.S. to be exported back to Europe, improving supply in key hubs such as London and Zurich, strategists noted.
