Why palladium spent most of January above ELEVATED

Palladium maintained elevated risk levels throughout January 2025, driven by persistent supply concentration and geopolitical tensions across major producing nations.

An illustrative walk-through of how a sustained run of elevated risk reads in the data.

The pattern

In a stretch like this, the models classify Palladium as ELEVATED or higher on most trading days — an unusually persistent run for this group. The sustained elevation is not driven by a single event; instead, the pipeline detects a rolling series of geopolitical and supply-chain disruptions that compound over the period: measures affecting supply from major producing nations, power-supply constraints affecting refining capacity, and escalating rhetoric around export controls.

Reading model performance

The way to judge a run like this is whether the elevated days are followed by realised volatility more often than the base rate — which is exactly what the walk-forward backtests measure across the full history (see the Methodology section for the out-of-sample AUC figures). A stretch of false positives is expected whenever market attention shifts to macro drivers, such as central-bank communications, that temporarily crowd out supply-specific signals.

Signal architecture insights

Across a run like this, the dominant risk factors tend to be consistent: production risk, geographic spread, and news-volume acceleration recur as top drivers. That consistency suggests the model is tracking a structural supply-side theme rather than responding to noise.

Cross-mineral contagion can also play a role. The contagion feature measures how risk signals in related minerals move together; in precious-metal groups, signals in one metal can lead adjacent metals by a trading day or two, consistent with shared mining supply chains.

14-day vs 30-day horizon

The 14-day and 30-day models can diverge: the shorter horizon may ease first as immediate news intensity fades, while the 30-day model stays ELEVATED, indicating that underlying structural risk has not fully dissipated. Watching the two horizons together is often more informative than either alone.