Palladium Continues to Rally - Will it Rival Gold?

Palladium climbed almost 3 percent during Thurday’s (November 15) session, placing the precious metal in a position where it could soon rival gold prices.

The metal sealed its third consecutive day of increases to land on its highest settlement on record thanks to growing demand paired with tighter supplies.

“A combination of supply concerns and buoyant demand have driven price developments in recent weeks,” stated analysts at FocusEconomics.

“Geopolitical tension between the US and Russia led some observers to fear that Russia, by far the largest global producers of palladium, could restrict supply. This would aggravate an already tight market, in which a substantial supply deficit is forecast for this year and next,” they added.

Demand for palladium has also increased in 2018 as China’s need for the metal has become larger and more apparent. As the Asian country seeks to boost its economy through stoking car sales, demand for the precious metal has begun to increase as it is used in catalytic convertors by automakers.

“China’s needs for palladium is starting to show up,” R. Michael Jones, chief executive officer of Platinum Group Metals told MarketWatch.

“We have been predicting this for some time. Look out gold,” he added.

Palladium demand is also on the upswing thanks to a shift from diesel to gasoline and hybrid vehicles, which generally use more of the commodity.

Moving forward, market watchers believe that this week’s spike in palladium prices is only the beginning of a trend that will continue into next year.

“Demand for palladium outstripped supply over the past eight years. And 2019 is setting up to be another year of shortages,” stated Anthony Planas of Banyan Hill.

Adding, “[p]alladium’s high price is attracting the attention of precious metal speculators. It is also setting up for a recovery in platinum.”

Due to the increase in demand, paired with a marginal concern over supply, palladium prices have gotten closer to that of gold, with the yellow metal trading only approximately US$70.00 an ounce more.

Earlier in the year, gold was trading closer to US$500.00 more than palladium.

As of 3:07 p.m. EST,  palladium was up 2.70 percent, exchanging hands for US$1,142.00 per ounce.

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