Metals Weekly Round-Up: Palladium Price Sets New All-time High

Base Metals
10 year treasury rate forecast

Palladium rocketed to an all-time high of US$2,875 on Friday. Output disruptions mixed with forecasts of rising automotive demand are fueling the uptick.

Gold was moving towards a third week of gains as headwinds related to US 10 Year Treasury yields and the American dollar dissipated.

As yields and the greenback consolidated, concern over US President Joe Biden’s tax plan announcement and the US Federal Reserve’s meeting next week aided the yellow metal’s growth.

Values moved from US$1,775.90 per ounce to a four week high of US$1,796.50 by Wednesday (April 21).

A pullback set in on Thursday (April 22), dragging gold back to the US$1,780 range. The trend continued as markets opened on Friday (April 23), with the metal plummeting to US$1,772.

Holding at historical highs, the yellow metal may gain more upside as inflationary tones bolden.

“While higher interest rates may continue to pose headwinds for gold in the short and medium term, inflation expectations are also likely to move higher,” reads the World Gold Council’s latest gold outlook. “Historically, gold has performed well in high inflationary environments globally.”

More volatility may be unavoidable while markets await the president’s tax strategy and any news out of the Fed’s coming meeting. As of 10:44 a.m. EDT on Friday, gold was trading for US$1,772.47.

Silver followed a similar trajectory as its sister metal gold this week. The correlation between the two has seen the white metal weighed down by Treasury yields and a strengthening dollar.

Rallying from US$25.84 per ounce on Monday (April 19), silver briefly touched US$26.61 before retreating on Wednesday. A flat base metals performance also offered no aid to the versatile metal.

Silver is projected to make gains by the year’s end, maintaining a US$27 range as 2021 progresses, according to the Silver Institute’s annual World Silver Survey, released earlier this week.

“Metals Focus expects that the silver price will rise to a peak of US$32 later this year and that it will average US$27.30 overall in 2021, which would be a 33 percent increase over the 2020 average price,” it reads. Silver was priced at US$25.88 at 10:55 a.m. EDT on Friday.

Palladium rocketed to an all-time high of US$2,875 per ounce on Friday. Output disruptions at top producer Norilsk Nickel (MCX:GMKN) and forecasts of rising automotive demand are fueling the uptick.

Earlier this year, the miner experienced flooding at two of its mines. The Russian mining major is a top producer of copper and nickel, as well as a leader in palladium output.

Palladium has pushed higher throughout Q1 as a result of the mine issues, and could see more upside as even a moderate growth rate in the auto sector could spur higher values.

Palladium took a breather from its fresh high and was selling for US$2,762 at 11:11 a.m. EDT on Friday. For its part, platinum was moving for US$1,223 per ounce.

The base metals space registered a muted performance this week. According to Fastmarkets, the sector is also awaiting the market’s reaction to news around American taxes and interest rates next week.

“The picture across the LME metals has not changed much this week; aluminium has been able to push the envelope on the upside, copper and tin are perched just below recent highs, zinc and nickel remain entrenched in sideways channels and lead is consolidating in mid-range,” states a Friday morning note.

Copper moved flatly, entering the week at US$9,415 per tonne and edging to US$9,475 by Thursday.

“Copper seems to be looking for an excuse to break higher, but if it fails to do so then the risk of stale long liquidation could increase, especially if Wall Street gets jittery,” states the report.

The red metal was priced at US$9,475.50 on Friday morning.

Nickel prices were also under pressure for the second last week of April. Rising demand out of the electric vehicle space and stainless steel production have supported the metal; however, a push for more production out Indonesia is likely to dampen that environment.

Nickel was valued at US$16,009 per tonne early on Friday.

Zinc and lead also retracted over the five day period, shedding 1.3 percent and 2.1 percent, respectively. After dipping to US$1,982 per tonne, lead climbed back above US$2,000 on Thursday.

Friday saw zinc trading for US$2,805 per tonne and lead for US$2,017.

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

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