Palladium futures are falling for the eighth consecutive month from their peaks at $3019 per ounce in April-May this year. And there are a number of reasons for such a decline as palladium is used as an industrial metal for the production of car components that are used in high-ecological standard engines. However, the car production industry is suffering due to lagging demand and supply chain disruptions.
The other reason is persisting expectations about the faster tapering of the bond purchasing programs and interest rates hike by the Federal Reserve (Fed). The Omicron variant could also be considered as a bit of a worry amid fears of possible lockdowns and further drops in demand. Due to all these reasons, palladium plunged 44% from its May peak and continued on its downward spiral until mid-December, where its futures are traded around $1670 per ounce.
But nothing is over for palladium at the moment. If you look at the weekly or monthly chart of its price, you may find a “rising wedge” pattern that continues implementing itself and point to the $1360-1380 per ounce zone. So, we may consider buying operations only once the price will be near that level. Moreover, the minimums of March 2020 also point to this zone. Prices have been declining for a long time up until now and the asset is longing for an upside correction. The prices of futures may return to $2200 per ounce alongside the correction. However, any long-term bets would be certainly premature as the future green development of the global economy and car industry, in particular, is clouded. For a more accurate analysis, the pace of hybrid and electric vehicle construction should be considered.
According to Citigroup palladium prices may rise significantly along with the recovery in demand. The shortage of palladium is inevitable as the car industry recovers. But this forecast is likely to be moved further in time closer to 2023.
The other reason is persisting expectations about the faster tapering of the bond purchasing programs and interest rates hike by the Federal Reserve (Fed). The Omicron variant could also be considered as a bit of a worry amid fears of possible lockdowns and further drops in demand. Due to all these reasons, palladium plunged 44% from its May peak and continued on its downward spiral until mid-December, where its futures are traded around $1670 per ounce.
But nothing is over for palladium at the moment. If you look at the weekly or monthly chart of its price, you may find a “rising wedge” pattern that continues implementing itself and point to the $1360-1380 per ounce zone. So, we may consider buying operations only once the price will be near that level. Moreover, the minimums of March 2020 also point to this zone. Prices have been declining for a long time up until now and the asset is longing for an upside correction. The prices of futures may return to $2200 per ounce alongside the correction. However, any long-term bets would be certainly premature as the future green development of the global economy and car industry, in particular, is clouded. For a more accurate analysis, the pace of hybrid and electric vehicle construction should be considered.
According to Citigroup palladium prices may rise significantly along with the recovery in demand. The shortage of palladium is inevitable as the car industry recovers. But this forecast is likely to be moved further in time closer to 2023.