Palladium's 5% Intraday Plunge: Fundamental Drivers and Industrial Metals Outlook

Palladium futures experienced a significant

, currently trading at on February 5, 2026 [1]. This decline represents part of a broader correction, with the metal down from the previous day and over the past month [1]. Despite this sharp pullback, palladium remains approximately than levels seen a year ago, indicating a still-strong fundamental base.

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China’s manufacturing sector continues to show pronounced weakness, with copper trading volume dropping from February 3-5, 2026 [2]. This slowdown in the world’s largest metals consumer has created ripple effects across the industrial metals complex, directly impacting palladium demand from the automotive and industrial sectors [2].

The structural shift toward battery electric vehicles (BEVs) is fundamentally altering demand dynamics for platinum group metals (PGMs). As platinum substitution in autocatalysts advances and BEV market share rises, over the medium term [3]. This secular trend is creating structural headwinds for palladium prices beyond short-term volatility.

The US dollar has rebounded significantly, reducing demand for dollar-denominated metals [1]. Currency dynamics have created headwinds across the precious metals complex, with palladium particularly sensitive due to its industrial demand profile.

Palladium had surged to a in late January 2026 [1]. The current decline represents natural profit-taking after an extended rally, with speculators exiting positions as prices retreated from resistance levels.

Pending reviews of trade agreements and potential have increased risk premiums across industrial metals [2]. Specific tariff threats on Canadian palladium imports have added supply-side uncertainty, as Canada represents a significant supplier to global markets [1].

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The synchronized decline across multiple metals strongly suggests a

rather than a palladium-specific shock:

Metal	Performance	Key Driver
Palladium	-6.93% (daily), -13.90% (monthly)	EV transition, China demand
Platinum	-9%+ (reported)	Similar autocatalyst exposure
Copper	Below $13,000/ton threshold	China manufacturing slump
Silver	-15% (multi-day decline)	Industrial demand weakness
Aluminum	~2% decline	Broad-based pullback

The price correlation analysis shows strong linkages between palladium, platinum, and copper (correlations: 0.73-0.79), indicating these metals are responding to

[4].

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While China’s state-directed infrastructure spending (such as the 30.8 billion CNY, +35% YoY state-grid investment) provides long-term demand support, [2]. This creates a timing mismatch where infrastructure-driven demand has not yet offset the current manufacturing weakness.

The collapse of US-LME price premiums has redirected tonnage from North America to Asian LME warehouses, building inventory and creating that dampens price recovery potential [2]. Rising stockpiles in Dubai, Singapore, and Shanghai are temporarily suppressing prices.

US-China trade frictions have introduced across the metals complex. The potential for tariffs on refined copper and other metals has prompted traders to hedge positions, adding to market uncertainty [2].

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Timeframe	Palladium Forecast
End of Q1 2026	$1,746.87 USD/oz
12-Month Target	$1,986.89 USD/oz
Current	$1,618.00 USD/oz

Despite the current correction, analysts project a

as market fundamentals reassert themselves. The medium-term outlook remains constructive, supported by steady automotive demand and gradual industrial activity recovery [1].

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The palladium plunge reflects a confluence of factors:

(profit-taking, dollar strength), (EV transition reducing autocatalyst demand), and (China manufacturing slowdown). The synchronized decline across copper, silver, platinum, and other industrial metals indicates this is not an isolated event but rather a driven by common factors.

: Continued volatility expected, with support around $1,600/oz and resistance at $1,750/oz.

: Gradual recovery anticipated as trade uncertainties resolve and infrastructure spending translates into physical demand. However, the secular EV transition poses structural challenges to palladium’s long-term demand profile.

: While the current correction appears overdone on a year-over-year basis, investors should monitor China economic data, US trade policy developments, and EV adoption rates as key indicators for industrial metals sentiment.

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[1] Trading Economics - Palladium Price Data (https://tradingeconomics.com/commodity/palladium)

[2] Discovery Alert - Industrial Metal Market Strategic Realignment 2026 (https://discoveryalert.com.au/industrial-metal-market-strategic-realignment-2026/)

[3] Passive Components Europe - Metal Prices and Passive Component Analysis (https://passive-components.eu/how-metal-prices-are-driving-passive-component-price-hikes/)

[4] Ginlix API Data Analysis - Cross-Metal Correlation and Performance Metrics [0]