Bank of America Raises Platinum and Palladium Price Targets Amid Market Strength

Bank of America has raised its price targets for platinum and palladium for 2026 following a strong performance in both metals this year. The bank increased its platinum price forecast to $2,450 per ounce from $1,825, representing a 34% upward revision. For palladium, the target was lifted to $1,725 per ounce from $1,525, a 13% increase.

The upward revisions reflect BofA's view that platinum will continue to outperform palladium, driven by persistent market deficits and strong demand. Spot prices for platinum and palladium have already exceeded the bank's previous forecasts, reaching $2,446 and $1,826 per ounce, respectively.

Platinum's stronger performance has been supported by its use in industrial applications and its status in the investment space. The Aberdeen Physical Platinum Shares ETF (PPLT) has delivered an impressive 133.98% return over the past year, highlighting investor interest in the metal.

Why Did This Happen?

BofA cited persistent market deficits as a key driver for platinum's performance. These deficits have been exacerbated by supply constraints, particularly in South Africa, which accounts for about 78% of the world's platinum reserves. Factors such as South Africa's energy crisis, aging mines, and underinvestment have limited production of platinum and other platinum group metals (PGMs).

The World Platinum Investment Council (WPIC) has also noted that platinum is facing long-term supply challenges. The council forecasts a significant annual deficit in 2025, which will deplete above-ground stocks to only five months of demand cover. These dynamics are expected to support continued strength in platinum prices over the coming years.

How Did Markets React?

Investor confidence in platinum has translated into strong performance for platinum-related ETFs. The PPLT ETF, with a market cap of $3.14 billion, has attracted significant investment as a proxy for physical platinum. BofA's updated price targets have likely reinforced this trend, as investors seek exposure to a market they perceive as undervalued and structurally improving.

Palladium, while not as strong as platinum, also saw an increase in its forecast. The bank's view reflects a more moderate outlook for palladium compared to platinum, which it attributes to differing supply and demand fundamentals.

What Are Analysts Watching Next?

Analysts and investors are monitoring whether the current supply-demand imbalance will persist. For platinum, this includes tracking South Africa's production levels and any potential policy or investment changes that could boost output. For palladium, the focus is on broader economic factors that could impact demand from the auto and industrial sectors.

The performance of platinum ETFs will also remain a point of interest. ETFs offer investors an efficient and cost-effective way to gain exposure to platinum, avoiding the logistical and financial complexities of physical bullion. The PPLT ETF's strong performance has already drawn attention to the potential for platinum-related investment strategies in 2026.

In parallel, geopolitical and economic developments in South Africa and other major platinum-producing regions will shape the outlook. South Africa's decision to review its prime lending rate, which impacts a wide range of credit facilities, could indirectly influence investment flows into commodities. Meanwhile, South Africa's geopolitical alignment with countries such as China, Russia, and Iran in joint naval exercises has also raised broader questions about its economic and trade policies.

These developments underscore the complex interplay of factors that influence platinum and palladium markets. For investors, the updated forecasts from BofA highlight the importance of monitoring both structural supply issues and broader macroeconomic trends as they shape price movements in 2026.