(Kitco News) - While most investors have been focused on gold’s recent breakdown, there has been a broad-based sell-off in the precious metals complex, with platinum group metals feeling the brunt of the sell-off.
Both platinum and palladium have fallen to their lowest levels of the year. Although there is room for prices to fall further, one bank is maintaining its bullish year-end outlook for PGMs.
“The rally in PGM prices has lost steam since late January, largely tracking moves in gold. Further, ongoing macro headwinds from the conflict in the Middle East add downside risk to demand for industrial metals,” said commodity analysts at Bank of America. “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.”
The comments come as spot platinum currently trades at $1,711 an ounce, down more than 2% on the day. At the same time, palladium last traded at $1,203 an ounce, up 0.5% on the day. Platinum and palladium prices have dropped more than 9% and 6%, respectively, since Friday’s sell-off.
However, Bank of America still expects platinum prices to average around $3,000 an ounce 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.
PGMs saw significant gains through 2025 as the global trade war and the threat of tariffs on precious metals created significant liquidity issues in the physical market. However, the commodity analysts noted that most of those issues have been resolved, as the tariff threats never materialized.
“The decision to impose no tariffs triggered platinum outflows of more than 200koz from the NYMEX warehouses, equivalent to half of the inflows in 2H25. In contrast, palladium also experienced outflows in late January, yet those have now more than reversed as the U.S. Commerce Department issued a final anti-dumping duty of 133% and a countervailing duty of 109% on Russian palladium ounces,” the analysts said.
Bank of America also highlighted 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.
The analysts pointed out that a growing divergence in the automotive sector could create some volatility as demand for electric vehicles in China outpaces that for traditional internal combustion engine vehicles.
“This year, EVs are expected to account for around 40% of total light vehicle production, surpassing ICE vehicles for the first time, with ICE share falling to 36%, while hybrids are set to reach 24%. The phase-out of ICE vehicles in China has been pronounced, with production declining to c.14mn units in 2025 from 21mn units in 2020,” the analysts said. “By contrast, the pace of EV adoption remains slower in Europe and the U.S., with the latter stepping back from earlier electrification ambitions.”
Along with weakening industrial demand, Bank of America is also keeping an eye on platinum jewelry demand, as that segment of the market is losing momentum.
“Jewellery demand is set to weaken, particularly in China, where surplus inventories accumulated during the mid-2025 fabrication surge continue to weigh on the market. While part of this excess stock has already been recycled, retailers remain well-stocked and consumer demand subdued, pointing to a sharp contraction in Chinese fabrication volumes this year,” the analysts said.
Although there is uncertainty surrounding demand as the global economy struggles, Bank of America sees a similar impact on supply.
The commodity analysts said that the ongoing conflict in the Middle East, which is impacting the energy market and driving inflation, could also affect production, particularly in South Africa.
“South Africa is exposed to global oil market disruptions because it is a net oil importer, with limited domestic crude production and declining refining capacity, forcing the country to increasingly rely on imported fuel,” the analysts said. “This exposure is particularly acute for the mining sector, where diesel powers haulage, mechanised operations and backup power generation in a system historically prone to load shedding. Diesel prices have risen sharply since the onset of the war, in addition to Eskom having implemented an 8.76% increase in electricity tariffs from April 2026. These factors are together pushing up mining input costs. Already in Q1, Sibanye-Stillwater reported a 13% YoY increase in unit costs, highlighting cost pressures from ongoing inflation, including higher labour and energy costs.”
