Palladium traded near $1,230 per ounce, hovering around its late-September level as tensions in the Gulf fueled inflation concerns.
Crude oil prices initially surged after Iran attacked US military sites on Sunday, raising market uncertainty, although both sides later agreed to halt hostilities and resume peace talks.
Sentiment in the platinum group metals (PGM) market remains pressured by long-term inflation concerns and expectations of a hawkish Federal Reserve, with markets pricing in three interest rate hikes this year, reducing the appeal of non-yielding assets such as palladium.
Meanwhile, the PGM market is expected to post a small surplus.
On the demand side, a growing electric vehicles market share reduces long-term demand for palladium used in catalytic converters for internal combustion engine vehicles, as Chinese automakers expand across borders, adding further headwinds.