The Baggies were heavily linked with a swoop to sign the USA striker in the summer but were unable to strike a deal.
Dike has remained with Orlando City in MLS, where he has been in mightily impressive form.
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Since his return to MLS, he has netted four times in 10 games, while also registering an assist.
Dike also has eight caps under his belt, scoring three goals for the United States national team, and Palmer believes that the club will return for the forward in January, particularly if the Baggies are still at the top end of the Championship under manager Valerien Ismael.
He said: “I do believe Christmas, if they’re there or thereabouts in the hunt, he’ll get his marquee striker, he’ll get the players in to take West Brom back up to the Premier League. It may be a case in January that they go back in for him and they get him then.
“The club will allow him to do that.”
Dike is valued at £9m by Transfermarkt and he has scored a total of 12 goals in 32 games for Orlando.