Palladium price is still at risk as it trails platinum, gold, silver

By:
on May 2, 2023
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  • Palladium has been the worst-performing precious metal this year.
  • Many manufacturers have moved to the cheaper platinum.
  • The price is on the cusp of a bearish breakout in the near term.

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Palladium price has deviated from other precious metals like gold, silver, and platinum. It has dropped by more than 36% in the past 12 months while platinum price has jumped by over 10% in the same period. Gold price and silver have all jumped by more than 10% in the same period.

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Why is palladium trailing other precious metals?

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Palladium price was one of the best-performing precious metals in the past decade. The metal jumped from $160 in 2008 to an all-time high of $3,000 in February this year. It is unclear why palladium price has plunged by more than 50% from the highest point in 2022.

A likely reason is that the deviation between platinum and palladium was significantly higher in the past few months. For example, when palladium was trading at $3,000 in 2022, platinum was trading at about $826. Therefore, many companies that manufacture catalytic converters moved to platinum, which was much cheaper.

The other reason is that the Russian war in Ukraine led to a shift in platinum, which is found in abundance outside Russia. South Africa, the UK, and the US are the biggest exporters of platinum while Russia is the fourth-biggest. In terms of palladium, Russia is the biggest exporter followed by South Africa, the US, the UK, and Italy.

Therefore, there is a likelihood that platinum price will continue rising since it is cheaper than palladium at the current levels. The two metals still have a deviation of about $300, which is relatively high. As I wrote in this article, elevated platinum demand is expected to push it to a deficit this year.

The same is true with palladium, which moved to a surplus in 2021. Analysts expect that palladium will move to its first supply deficit in three years this year. The deficit is expected to come in at 556k ounces this year, according to the World Platinum Council.

Palladium price forecast

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Palladium chart by TradingView

The daily chart shows that palladium price has been in a bearish trend in the past few months. Recently, the metal has formed an ascending channel that is shown in red. This price is at the lower side of the ascending channel. It has also moved below the 25-day and 50-day exponential moving averages.

Therefore, I suspect that palladium prices will have a bearish breakout in the coming months as sellers target the key support at $1,300, which is about 11% below the current level.

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