Palladium approaches the critical $1,900 mark: After a 70% plunge, is it a trend reversal or a rebound trap?

Since 2020, few commodity price trajectories have been more dramatic than palladium’s. In just a few years, it has experienced a wild bull market driven by supply shortages, followed by a deep bear market triggered by demand collapse. After reaching a historic high of $3,400, its price once fell to around $1,000, a decline of over 70%. As of February 28, 2026, the current price is $1,816.50.

2026 Palladium Price Chart. Data Source: Apmex

As of February 28, 2026, Gate Metal Contracts data show that the perpetual contract for palladium (XPDUSDT) has a mark price of $1,783.71, down 2.44% in 24 hours, with an index price of $1,783.69. This level is in a delicate zone: away from the bottom but facing resistance at the bull-bear boundary. The market is currently highly focused on the key resistance zone between $1,900 and $2,000. Whether it can break through effectively will be a key indicator of whether palladium is entering a structural recovery or merely experiencing a technical rebound within a long-term downtrend.

From Scarcity Premium to Structural Obsolescence: A Complete Narrative Reversal

Extreme volatility in palladium prices is rooted in a dramatic reset of its supply and demand fundamentals over the past five years. The rally from 2020 to early 2022 was driven by a typical supply crisis. Global palladium mining is highly concentrated, with Russia and South Africa accounting for over 76% of production. Geopolitical tensions directly triggered fears of supply disruptions, pushing the scarcity premium to its peak. At that time, the main market logic was “structural shortage.”

However, as panic subsided and the global automotive industry’s electrification accelerated, the narrative reversed 180 degrees after 2022. Since over 85% of palladium demand is tied to internal combustion engine catalytic converters, the rise of electric vehicles directly threatens its core demand base. Meanwhile, the substitution effect of platinum for palladium has become increasingly apparent, further suppressing long-term demand expectations. The market narrative shifted swiftly to “structural obsolescence,” leading to massive position liquidations and price crashes.

Mainstream views believe that the sharp decline after 2022 was not just a cyclical correction but a re-pricing of its long-term demand outlook. When a commodity’s core use faces the risk of being phased out by technological revolution, its valuation system is fundamentally shaken.

Speculation

Despite the significant price decline, discussions about whether the “demand peak” has passed continue. If the transition period for hybrid vehicles (which still require palladium catalysts) is longer than expected, or if new demand drivers emerge in industry, the overly pessimistic “obsolescence” narrative may be revised.

Bottoming Out, but the Driving Logic Has Changed

Recent supply-side developments provide support at the bottom. On one hand, palladium supply from Russia continues to face sanctions risks; the U.S. has even discussed imposing high anti-dumping tariffs, limiting supply flexibility. On the other hand, due to previous low prices, major producers like South Africa have insufficient capital expenditure, and the long cycle for expanding mining capacity—7 to 10 years—also constrains output growth.

However, structural demand issues remain severe. By 2026, global palladium demand from gasoline vehicle catalysts is expected to decrease by about 12%. Research from Galaxy Futures indicates that overall palladium demand growth is limited, and the market may enter a surplus situation in 2026. This tug-of-war between “tightening supply” and “shrinking demand” complicates palladium’s pricing logic.

Viewpoint

The current market consensus is that palladium is gradually decoupling from pure industrial pricing, with its status as a precious metal gaining strength in investment. This means that, beyond supply and demand fundamentals, its price will increasingly be influenced by Federal Reserve monetary policy, the dollar’s trend, and geopolitical risk sentiment. This also explains why recent prices have shown correlation with platinum and gold.

Speculation

If “investment attributes” become the main pricing factor in the future, palladium’s price fluctuations may diverge from its fundamentals temporarily. For example, under expectations of liquidity easing, it might rebound sharply along with other precious metals, but the sustainability of such a rebound will ultimately depend on a recovery in industrial demand.

Significant Divergence After Extreme Pessimism

Mainstream View: Cautiously Optimistic, Watch for Breakout Confirmation

Some futures research institutions believe that the worst phase of palladium’s decline is over. Technically, since holding above $1,000, lows have been progressively higher, and momentum indicators have recovered from oversold levels. They generally see the $1,900–$2,000 range as the “bull-bear dividing line,” with a sustained breakout confirming a shift in long-term chart structure.

Controversial View: Weak Fundamentals, Rebound Is a Selling Opportunity

Another segment of market participants remains more pessimistic. Analysis from Shanghai Metals Market points out that recent gains in palladium are weaker than platinum and silver, indicating that its rise is mainly driven by macro risk aversion rather than fundamental improvement. CFTC data shows that net long positions in palladium futures remain at very low levels, highlighting investor skepticism about its long-term demand. They believe any rebound not validated by demand will attract new selling, leading to sharp volatility and rapid declines after short covering.

Overvaluation “End” and Undervaluation “Resilience”

The prevailing “structural obsolescence” narrative is based on the assumption that electric vehicles will linearly and rapidly replace internal combustion engines. However, this assumption faces challenges. The EU has announced delays to the 2035 internal combustion engine ban and has strengthened existing emissions standards, which could temporarily boost demand for automotive catalysts.

Viewpoint

Market narratives tend to exaggerate shortages during bull markets and overstate obsolescence during bear markets. The actual evolution of palladium demand may be more gradual than a “cliff-like” decline. Hybrid vehicles as transitional solutions may have a longer market lifespan and higher penetration than currently estimated, and these vehicles are also significant palladium demand sources.

Speculation

The market may need to reassess the speed of the “end.” If global auto sales, especially hybrid models, remain resilient, combined with a recovery in China’s manufacturing cycle, the current overly pessimistic demand outlook could be revised upward.

Reshaping Price Ranges and Industry Chain Rebuilding

Upstream Mining: A prolonged low-price zone has forced some high-cost mines to cut production or delay expansion plans. If prices stabilize above $1,700 and break higher, it will significantly improve miners’ cash flow and capital expenditure willingness. Conversely, if prices fall below $1,600 again, it could trigger further supply contraction.

Midstream Processing and Trade: Extreme price swings increase the difficulty of inventory management and risk hedging. Industry participants may prefer to maintain low inventories and short-term trading to avoid risks from directional moves.

Downstream Automotive Industry: For automakers still using palladium catalysts, stable prices are beneficial for cost control. If platinum’s substitution for palladium becomes more economically attractive (currently platinum prices have overtaken palladium), the pace of technological substitution may slow temporarily, providing a demand buffer for palladium.

Multi-Scenario Evolution

Scenario 1: Breakout — Confirming a Structural Upturn

• Trigger Conditions: Price remains above $1,900 on a weekly basis and effectively breaks through $2,000. This should be accompanied by increased volume and macro or industry positive signals (e.g., weaker dollar, easing rate expectations, or better-than-expected Chinese auto data).
• Logic: This would mark the end of a nearly two-year decline. Breaking through the $1,900–$2,000 zone could trigger technical buy signals and short covering, attracting trend traders. The narrative could shift from “when will the rebound end” to “where is the new upside,” with targets possibly reaching $2,200 or higher.
• Nature: Speculative. This is the most anticipated scenario by technical analysts, but it requires macro and industry resonance.

Scenario 2: Resistance — Rebound Fails, Re-enters Range

• Trigger Conditions: Multiple attempts to push above $1,900–$2,000 fail, forming a “false breakout” or double-top pattern. Subsequently, prices fall below $1,750 and seek support around $1,600–$1,700.
• Logic: This indicates a lack of intrinsic upward momentum. Each macro-driven rally is suppressed by fundamentals (electric vehicle pressure, inventory buildup). Palladium would re-enter a range of $1,500–$1,900, oscillating over time as the market waits for clearer supply-demand signals.
• Nature: Speculative. Many fundamental analysts currently lean toward this scenario, expecting a longer period of structural downside.

Conclusion

As of late February 2026, palladium stands at a delicate “key turning point” where bullish and bearish forces are finely balanced. It is affected by geopolitical risks on the supply side, demand shifts in the industry, and macro liquidity expectations. The $1,900 level is not only a technical resistance but also a test of whether the “structural obsolescence” bearish narrative has been overly priced in.

Until a clear breakout signal appears, it may be more accurate to view the current phase as a “bottom rebuilding” stage. This implies ongoing high volatility and sensitivity to macro news. The price action in the coming weeks or months will be crucial in determining palladium’s medium- to long-term positioning over the next three to five years.