UBS lifts palladium forecast as investment demand persists

Investing.com -- UBS revealed in a note to clients on Friday that it has raised its palladium price forecast by $300 per ounce to $1,800, citing a sharp pickup in investment flows into the metal.

Analyst Giovanni Staunovo stated that UBS made the upgrade “driven by solid investment demand in recent months,” noting that palladium’s relatively small market size “often results in large price swings.”

UBS said recent price momentum has been led not by traditional industrial uses but by investors positioning for lower U.S. interest rates, a weaker dollar and heightened geopolitical uncertainty.

Staunovo highlighted that “if investment demand stays strong, prices could move even higher,” though he cautioned that “without investment demand, we see the market being largely balanced,” which is why UBS prefers exposure to gold.

Palladium demand has shifted in recent years as autocatalyst consumption peaked in 2019, when prices surged past platinum and triggered substitution.

The rise of electric vehicles, which do not use autocatalysts, also weighed on demand.

However, the bank noted that palladium has rallied alongside platinum and silver since mid-2025, and with palladium now “significantly cheaper than platinum,” UBS expects autocatalyst producers “will likely switch back… in due course.”

Investment activity has been building. UBS pointed to rising ETF holdings since mid-2025 and a jump in speculative futures positioning after being net short for much of last year.

China may also be supporting demand, with Staunovo noting that new yuan-denominated platinum futures in Guangzhou have “likely supported palladium demand” as part of broader trading activity in the platinum-group metals.

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