Palladium Prices Jump – But Remain Below Two-Year High

Palladium prices jumped on Thursday on fresh technical buying signals. The commodity was recently up 3.4% at $802.22 per ounce. On a weekly basis, the commodity’s technicals have it rated as a Buy. Support is at $771 – and the commodity scaled its resistance of $778. The next upside could be its weekly resistance point of $808.34, but at $802, it will take considerable momentum to cross this level.

Palladium prices remain below their two-year high of $816 per ounce touched in early April poured more money into safe haven investments following an uptick in geopolitical instability. The increased interest in safe haven investments added to a strong physical demand picture for palladium and sent the commodity up significantly, but it fell short of scaling the $833 per ounce price point which capped prices during its last rally in 2015.

Right now, the expectation is that demand won’t quite measure up to what we saw in 2016, but that is no reason to turn negative on the metal. 2016 was a good year for the physical demand picture for palladium with passenger vehicle sales in the three largest markets (the USA, China and the EU) increasing 8.5% in 2016 to 56.5 million vehicles. According to The Bullion Desk, so far this year passenger vehicle sales in China increased 6.3% in January-February and by 6.2% year-on-year in Europe, but sales in the USA contracted by 1.5% year-on-year in the first quarter.

Even though physical demand is retreating compared to 2016, and the fact that recycling is rising, the palladium market will remain in a deficit this year. Johnson Matthey has forecast a market deficit again this year, building on the 651,000 deficit seen in 2016.

Leia Toovey has a B.Sc. in geology from Simon Fraser University, and her degree had a focus on resource economics. Out of school, she started working in the booming mining industry of Vancouver, Canada, covering junior mining stocks and commodities including potash, copper, nickel, oil and gold. Then she moved to New York and worked as a commodities analyst covering a breadth of commodities, from the Baltic Dry Index through the softs. As a geologist she has a greater understanding of the exploration and extraction side of commodities, and how changes in technology and the depletion of resources impact pricing. At Economic Calendar she covers a variety of commodities, providing daily technical and fundamental analysis and assessing major market developments.