Bank of America Securities has notably revised upward its price forecasts for key members of the platinum group metals (PGMs) sector for the year 2026, reflecting an evolving market environment shaped by constrained supply chains, trade impediments, and increasing investor demand. On January 9, the investment bank's analysts elevated their platinum price forecast from $1,825 to $2,450 per ounce and similarly raised the palladium forecast to $1,725 from $1,525 per ounce. These revised targets effectively reposition price expectations as market prices recently surpassed $2,440 for platinum and exceeded $1,825 for palladium.
The bank emphasizes the likelihood of platinum outperformance relative to palladium, a stance underpinned by ongoing deficits in the platinum market. Central to this thesis is the anticipation that any incremental supply response will be sluggish, stemming from a combination of disciplined production strategies among miners and the inelastic nature of existing mining capacity.
A defining distinction in the current market narrative is the pronounced influence of trade policies and tariff risks, which have introduced greater volatility and altered traditional supply routes. U.S. trade investigations have intensified limitations on physical availability, particularly for palladium, distorting typical flow patterns. Bank of America highlights the unresolved threat that the imposition of duties could inflate inventories on U.S. exchanges dramatically, generating significant premiums for physical delivery over exchange-traded quantities.
Palladium market dynamics are notably sensitive to the prospect of punitive tariffs on Russian-origin materials. The U.S. Department of Commerce has determined an estimated dumping margin near 828% on unwrought Russian palladium, indicating that such material is being offered at prices almost nine times below what is deemed "fair value." Were these tariffs to be enacted, the resulting escalations in domestic pricing could be substantial, reflecting Russia's dominant position as a global palladium supplier.
Compounding these trade-related uncertainties, production constraints have also intensified market tightness. Russian producer Norilsk Nickel reported output declines attributable to equipment transitions and changing ore compositions. As a result, production figures for the first nine months of 2025 reveal a 7% decrease in platinum output and a 6% reduction for palladium. Although these shortfalls have constricted global supply, Bank of America projects a recovery in Russian production moving forward.
Simultaneously, Chinese demand dynamics have gained prominence as a potential driver of platinum consumption. A resurgence in jewelry demand, paired with record gold prices, is prompting substitution effects favoring platinum. Bank of America estimates that even a modest 1% reallocation from gold to platinum jewelry could expand the platinum market deficit by approximately one million ounces, equating to roughly 10% of global supply. Furthermore, the introduction of physically backed platinum and palladium futures contracts on the Guangzhou Futures Exchange has accelerated metal inflows into China, with palladium imports quadrupling since September.
While bullish supply-demand fundamentals underpin current price behavior, cautionary perspectives remain. Heraeus, a precious metals service provider, has noted that platinum prices, having closed December over 44% above their 200-day moving average, appear stretched. Such valuation levels historically precede mean-reversion corrections. Heraeus cautions that unresolved U.S. government actions, including Section 232 tariffs and ongoing Russian anti-dumping probes, continue to loom as material risks for both platinum and palladium pricing.
Historical precedent supports this measured outlook: in seven past instances where platinum traded more than 20% above its 200-day average, prices ultimately corrected by 10% to 20%. This pattern suggests a non-trivial possibility of near-term price adjustments despite the prevailing bullish case.