Platinum, palladium lose glitter, but may gain by the end of Q3

After a sizzling start to the year, platinum and palladium have dropped by 19 per cent and 23 per cent, respectively, this year. However, both precious metals are likely to gain by the end of the third quarter this year, analysts said. 

“… platinum and palladium prices (will) return to levels above $2,000 an ounce (oz) and $1,500/oz, respectively, by the end of Q3 2026. However, if talks (between the US and Iran)  break down and the conflict escalates further, platinum and palladium could decline by another 10 per cent this year on fears of a global recession,” said research agency BMI, a unit of Fitch Solutions.

At the moment, the BMI macro team predicts a 45 per cent probability of the Iran war escalating further.

Bank of America said the rally in platinum group of metals (platinum and palladium) prices has lost steam since late January, largely tracking moves in gold. Further, ongoing macro headwinds from the conflict in West Asia add downside risk to demand for industrial metals. 

Bullish for Q4

“That said, we remain bullish on gold into 4Q, which we expect will draw investors back into the PGM market and add upward pressure to prices,” it said.

Currently, platinum is quoted near a six-month low of $1,668/oz, and palladium is ruling near an 8-month low of $1,263.5 an ounce. Both metals have lost steam after gold peaked at $5,608 an ounce on January 19.

The World Platinum Investment Council (WPIC) said the platinum deficit this year is forecast at 297,000 oz. “Further above-ground stocks have depleted to just under three months’ worth of cover to meet global demand projected by the end of 2026,” it said. 

Bank of America forecast a shifting demand in PGM markets, as platinum is expected to see a small deficit this year while palladium is forecast to see a small surplus.

Price forecast

“We forecast platinum and palladium prices to average $2,000/oz and $1,500/oz, respectively, in 2026,” said BMI.

Bank of America expects platinum prices to average around $3,000 oz by the fourth quarter of 2026 and through the first half of 2027. Palladium prices are forecast to average around $2,200 an ounce in the last three months of the year. 

BMI said the sentiment in the PGM market is being dampened by concerns of inflation, a stronger dollar and diminished hopes of US Fed rate cuts. “Our economists have lowered their 2026 global growth forecast to 2.4 per cent, down from 2.8 per cent before the US-Iran conflict began, while increasing their global inflation forecast to 4.1 per cent from 3.1 per cent previously,” said the research agency. 

Its economists see risks for the dollar as skewed to the upside, with a 30-40 per cent probability that the US dollar index could appreciate by 5-10 per cent from current levels, creating an additional headwind for precious metals. 

EV threat

Bank of America said that a growing divergence in the automotive sector could create some volatility as demand for electric vehicles (EVs) in China outpaces that for traditional internal combustion engine vehicles.

EVs are expected to account for around 40 per cent of total light vehicle production, surpassing internal combustion engine (ICE) vehicles for the first time, with ICE share falling to 36 per cent, while hybrids are set to reach 24 per cent. 

BMI said the PGM market is vulnerable to an oil price shock, given the market’s dependence on the automotive sector.As a result of high energy prices and disruption to flows through the Strait of Hormuz, global vehicle sales are expected to decline 0.9 per cent in 2026 to 99.2 million units.