UBS has increased its outlook for palladium prices, lifting its forecast by $300 an ounce to $1,800, as renewed investor interest continues to drive momentum in the metal, the bank said in a client note on Friday.
UBS analyst Giovanni Staunovo said the upward revision was “driven by solid investment demand in recent months,” adding that palladium’s comparatively small market size “often results in large price swings.”
According to the bank, the recent rally has been fueled less by industrial consumption and more by financial investors positioning for a backdrop of lower U.S. interest rates, a softer dollar and elevated geopolitical risks.
Staunovo noted that “if investment demand stays strong, prices could move even higher,” while cautioning that “without investment demand, we see the market being largely balanced,” a key reason UBS continues to favor gold exposure over palladium.
Structural demand for palladium has shifted over recent years. Use in autocatalysts peaked in 2019, when a sharp surge in prices above platinum levels encouraged substitution. The growing adoption of electric vehicles, which do not require autocatalysts, has also weighed on longer-term consumption.
That said, UBS observed that palladium has risen in tandem with platinum and silver since mid-2025. With palladium now “significantly cheaper than platinum,” the bank expects autocatalyst manufacturers “will likely switch back… in due course.”
Investor participation has continued to build. UBS highlighted increasing ETF holdings since mid-2025, alongside a rebound in speculative futures positioning after investors were net short for much of last year.
China may also be playing a supportive role. Staunovo pointed to the launch of new yuan-denominated platinum futures in Guangzhou, which he said have “likely supported palladium demand” as part of broader trading activity across platinum-group metals.