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Investing.com - UBS has raised its palladium price forecasts by $50 per ounce across all time periods, citing expectations that the market will remain slightly undersupplied through next year.
Option market sentiment for palladium remains moderately positive, though closer to neutral than earlier this year, according to UBS analysis.
The implicit volatility differential between call and put options over the next one to six months currently stands at 1.8% to 2.4%, down from the 3.4% to 9.1% peak observed at the start of the year.
The earlier spike in optimism between early November 2024 and late January 2025 likely stemmed from concerns about potential new sanctions targeting Russian palladium exports.
Russia produces approximately 40% of global mine supply, but with Russian metal continuing to flow into markets, supply disruption concerns have diminished.
Near-term price volatility will depend heavily on the outcome of the US Critical Minerals Section 232 investigation and an antidumping petition filed by mining company Sibanye and the United Steelworkers Union.
Market participants are awaiting a decision on whether the US administration will implement tariffs on palladium imports.
Despite the price target increase, UBS indicated it sees more upside potential in other precious metals compared to palladium, even as the palladium market is expected to remain slightly undersupplied through 2026.
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