Palladium prices fell on Friday despite a weaker US dollar against most major currencies and renewed optimism over easing trade tensions between the United States and China — factors that would typically support demand.

According to Capital.com, palladium has risen about 26% since the start of October to around $1,500 per ounce. This surge has coincided with gains in the platinum market and a general loosening of global financial conditions.

Expectations of US interest rate cuts and a softer dollar have also contributed to the metal’s rally, part of what analysts call the “Gold + Liquidity Wave” that has lifted precious metals broadly.

Palladium is used almost exclusively in catalytic converters for gasoline engines, meaning US car and electronics manufacturers could face sharp cost fluctuations.

Technical analysis from Monex indicates resistance between $1,500 and $1,520 per ounce, with forecasts suggesting that while the overall trend remains upward, trading is likely to stay volatile in the near term.

Analysts at CPM Group noted that palladium’s strength is “closely linked to platinum’s performance,” while cautioning that continued inflation and weakness in the US labor market could restrain demand growth.

Meanwhile, the US Dollar Index edged down less than 0.1% to 98.8 by 13:59 GMT, after touching a high of 99.1 and a low of 98.7.

At the same time, palladium futures for December delivery dropped 2.1% to $1,457.5 per ounce at 14:00 GMT.