UBS has increased its price outlook for palladium by $50 an ounce across all forecast horizons, saying it expects the metal to remain modestly undersupplied through next year.
The bank noted that sentiment in the options market is still leaning positive, although it has drifted closer to neutral compared with earlier in the year.
Current implied volatility skews between call and put options for the one- to six-month period sit at 1.8% to 2.4% — a noticeable decline from the 3.4% to 9.1% highs recorded at the start of 2025.
UBS attributed the earlier surge in bullish positioning — seen from early November 2024 through late January 2025 — to market anxiety over potential new sanctions on Russian palladium exports. Russia accounts for roughly 40% of global mined supply, but steady flows of Russian metal have helped ease fears of major disruptions.
In the near term, price swings will depend heavily on the outcome of the U.S. Section 232 Critical Minerals investigation and an antidumping petition submitted by Sibanye and the United Steelworkers Union.
Traders are awaiting clarity on whether Washington will impose tariffs on palladium imports.
Even with its higher price target, UBS said it sees greater upside potential in other precious metals. Still, the bank expects palladium to remain in a slight deficit through 2026.