Palladium Market Update (October 11, 2012)

The palladium market has cooled off since mid-September, when it was in rally mode. Standard Bank noted that interest appears to have evaporated.

At the beginning of September, palladium continued on the upward path that it started in mid-August. The metal reached a six-month high of $695 on September 14, the day after the US Federal Reserve announced QE3, but failed to break through the $700 mark, a level last seen in March.

However, the Fed-inspired momentum quickly faded after the announcement, and since Lonmin (LSE:LMI) signed a wage agreement with striking workers, labor issues are not largely driving prices anymore. This situation is in contrast to platinum, which continues to react to the ongoing struggles in South Africa. Palladium ended September at $638, up $20.

In a recent report, Scotiabank expressed surprise that palladium ran up as much as it has. The metal has now undergone a period of consolidation, the bank said, and given the extent of the gains, it seems likely that further consolidation will be seen.