Palladium has extended its decline, touching a fresh four-month low as financial markets brace for a week packed with high-impact events. The precious metal is now trading deep in oversold territory, with the relative strength index (RSI) at 26, signaling that the selling pressure may be overdone in the short term.
Investors are turning their attention to the Federal Reserve's two-day policy meeting, which concludes Wednesday, and the release of the US core PCE price index—the Fed's preferred inflation gauge. These events are expected to provide fresh direction for the dollar and, by extension, for dollar-denominated commodities like palladium.
Adding to the bearish sentiment, HSBC revised its 2026 palladium price forecast downward, citing investor liquidation and shifting market fundamentals. The bank now expects an average price of $1,436 per ounce, down from its previous estimate of $1,546. Despite this, HSBC notes that constraints in mine supply could continue to offer support, and the metal may be fundamentally undervalued at current levels.
The macro backdrop remains challenging for non-yielding assets. Elevated crude oil prices have reinforced expectations that interest rates will stay higher for longer. Brent crude recently traded at a seven-month high of $117 a barrel, though it has since eased to around $109 amid renewed hopes for US-Iran peace talks. Persistent supply disruptions along the Strait of Hormuz, however, keep the risk premium intact.
Market participants largely expect the Fed to hold rates steady at 3.75%-4.00% this week, but a December hike is increasingly being priced in. Higher interest rates typically weigh on precious metals, which offer no yield. The US dollar has remained firm, supported by elevated Treasury yields, adding further pressure on palladium.
In addition to central bank policy, the week brings earnings from major tech companies such as Microsoft, Alphabet, and Meta. The ongoing tech sell-off has influenced risk sentiment and Treasury yields, indirectly affecting commodity markets.
From a technical perspective, palladium continues to trade below both the 25-day and 50-day exponential moving averages, with a bearish death cross in place since mid-September. The metal has been in the red for seven of the past eight weeks, and the near-term outlook remains cautious.
Analysts suggest that palladium may trade within a tight range in the near term, with support at $1,034 and resistance at $1,089. A corrective rebound could be capped at $1,146, while further downside might find support at $1,020.
This article is for informational purposes only and does not constitute financial advice.
