Metals Weekly Round-Up: Palladium Hits New All-time High

A growing supply deficit pushed the palladium price to US$2,892 per ounce this week before a mild correction forced values lower.

Shortages of the autocatalyst metal are expected to reach a five year high this year, a factor that will likely add more upside in the months ahead.

Gold was also on the uptick, reaching a three month high of US$1,890 per ounce as pressure from the US dollar subsided and inflationary tones strengthened.

The yellow metal has been on an upward trajectory since late February, adding 8.9 percent. Headwinds from 10 year Treasury yields and the US greenback decreased in April, giving gold room to grow.

“US economic data has given us strong inflation alerts this week, meaning yields and the dollar have fallen, strong supportive factors for gold,” Jeffrey Halley, OANDA senior market analyst, told Reuters.

“Additionally, I believe that upward trading momentum has increased for gold as investors now believe that prices have made a structural low.”

This was supported by data from the World Gold Council, which notes that bar and coin investment in Q1 was up 36 percent year-over-year. The segment accounted for 339.5 tonnes of gold demand.

“While the average gold price in Q1 was 13 percent higher y-o-y, it declined by 4 percent q-o-q,” reads the World Gold Council report. “The opportunity to buy at lower prices, relative to the highs seen last year, boosted consumer demand, particularly as many markets continued to emerge from lockdown and economic recovery lifted sentiment.”

Gold was valued at US$1,872.45 at 10:57 a.m. EDT on Friday (May 21).

Silver again neared the US$30 per ounce threshold late on Monday (May 17), but remained unable to break through. Despite the metal’s inability to surpass US$30, a growth trend is anticipated to take the metal to previous highs over the next two years, following a period of moderate gains.

“At some point, we think the price of silver will rise and rise sharp,” Jeffrey Christian of CPM Group said. “That increase we expect to coincide with the next financial and economic crisis.”

At that time, the silver price could top US$50, according to commodity research firm. Silver was trading for US$27.43 at 11:25 a.m. EDT on Friday.

Tightness in the palladium market sent values to an all-time high of US$2,829 per ounce this week. Forecasts suggest supply issues could stretch through the year, aiding in price growth.

“If we look at palladium, we’re looking at a new record high of US$3,000 for the annual average in 2021, a rise of 37 percent against 2020, which had already achieved a new high last year, with the full year average surpassing US$2,000 for the first time,” states a Metals Focus market overview.

The consultancy is projecting a deficit of more than 1 million ounces in 2021, driven primarily by a 16 percent recovery in auto manufacturer demand.

Palladium was selling for US$2,691.50 at 11:34 a.m EDT on Friday. Its sister metal platinum traded flatly for the week, ending the period at US$1,168, a 4 percent decline from Monday.

Copper continued to consolidate after soaring to an all-time high in early May. Since marking the US$10,724.50 per tonne milestone, it has fallen lower, spending this week locked below US$10,500.

The mid-week dip, which was registered across the base metals segment, prompted some bargain hunting, according to Fastmarkets.

“We have been saying despite the path of least resistance being upward, there is little room for complacency especially if China has its foot on the brake,” reads the Thursday (May 20) note. “The metals have had a very strong run over the past year so some meaningful pullback would not be surprising. We do, however, remain long-term bullish.”

Zinc was another record breaker this session, topping a 35 month high of US$3,063.50 per tonne. Its gains have been tied to fears over tax increases on miners in Peru and Chile impacting supply.

Friday morning saw zinc selling for US$2,945.50.

Starting the period at US$17,723 per tonne, nickel rose above US$1,800 a day later. By Friday, nickel was holding in the US$17,326 range.

Lead also made a muted gain, trading for US$2,181.50 per tonne on Monday, then climbing above US$2,200. Since April 21, lead has added 11 percent to its value. It ended the week at US$2,202.50.

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Securities Disclosure: I, Georgia Williams, hold no direct investment interest in any company mentioned in this article.