SKN | Platinum and Palladium: What UBS’s Revised Targets Mean for Strategic Metal Allocations

Why UBS Is Repricing the Precious Metals Complex

UBS has lifted its price expectations for both platinum and palladium after a sharp and sustained rally across the complex, signalling that the bank now sees a structurally tighter market rather than a short-lived speculative spike. Platinum prices have surged nearly $500 per ounce in just four weeks, reaching levels not seen in 17 years, prompting UBS to raise its platinum outlook by $300 per ounce and palladium by $100.

For sophisticated investors, the significance lies not in the magnitude of the rally, but in the drivers behind it. UBS frames the move as demand-led and policy-sensitive rather than momentum-driven, a distinction that matters when assessing whether higher prices are sustainable into 2026.

Combustion Engines Are Not Exiting as Fast as Markets Expected

A key factor behind UBS’s revised view is the European Commission’s proposal to relax aspects of its planned 2035 ban on internal combustion engine vehicles. Combined with slower-than-anticipated electric vehicle adoption, this has extended the expected lifespan of autocatalyst demand.

Platinum remains a critical input in catalytic converters, and UBS strategists Giovanni Staunovo and Wayne Gordon argue that the transition away from combustion engines will be more gradual than previously assumed. For capital allocators, this reframes platinum less as a sunset metal and more as a transitional asset with a longer cash-flow relevance window.

Investment Demand Is Now Reinforcing Industrial Demand

UBS also highlights a notable shift in investor behaviour. Higher investment demand is no longer merely following price action; it is contributing to tighter physical availability. This dual pressure from industrial usage and investor accumulation has compressed supply buffers, particularly in platinum, where above-ground stocks were already thin.

From a Swiss custody perspective, this matters because tighter physical markets tend to favour allocated, vaulted holdings over synthetic exposure, especially during periods of policy uncertainty.

Palladium’s Quiet Comeback Driven by Supply Frictions

While platinum has captured headlines, palladium has staged a less visible but equally important recovery, reaching its highest levels in nearly three years. UBS now sees palladium benefiting from substitution dynamics if platinum prices continue to rise, as well as from mounting supply constraints.

Remarks from Nornickel underscore this tightening. High lease rates have reportedly pushed industrial users to shift from leasing palladium to outright purchases, removing material from circulation and amplifying scarcity. UBS cautions that this supply-side friction has been underestimated by the market.

Policy Risk and Metal Flows Remain a Swing Factor

Despite the constructive outlook, UBS remains measured on near-term volatility risks. Investors are closely watching the outcome of the US Critical Minerals Section 232 investigation and related antidumping proceedings. Depending on tariff outcomes, platinum and palladium bars shipped into the US could be re-exported to Europe, potentially easing supply pressures in traditional hubs such as London and Zurich.

For high-net-worth investors, this highlights the importance of jurisdictional awareness. Metal flows, not just price forecasts, can materially affect liquidity and storage dynamics within Swiss vaulting structures.

What This Means for Strategic Allocations in 2026

UBS’s revised targets suggest that platinum and palladium are reasserting their relevance as strategic hedging assets rather than short-term tactical trades. Platinum’s role as an inflation and policy hedge is being reinforced by industrial persistence, while palladium offers asymmetric upside if substitution accelerates under higher platinum prices.

For globally diversified portfolios, the implication is not aggressive chasing of recent highs, but disciplined positioning within a broader real-asset allocation. Physical structure, custody location, and exposure sizing now matter as much as directional views.

CBBA Perspective

The repricing of platinum and palladium reflects a deeper recalibration of how markets view the energy transition timeline. For investors focused on capital preservation and long-term purchasing power, these metals are once again part of the strategic conversation.

For a confidential discussion on how precious metals can be integrated into a Swiss custody account as part of a broader risk mitigation framework, contact our senior advisory team.

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