Has Palladium hit rock bottom?
Palladium is currently trading at USD 1,974/t.oz, a 13-month low for the soft silver-white mineral. In August 2020, Palladium was trading at such a price before it shot up within a hair’s width of USD 3,000/t.oz.
The metal’s current price is sitting snugly between two weak touchstone levels. Over the coming trading week, we could see Palladium claw itself back up to USD 2,200/t.oz, rejecting prices as low as USD 2,000/t.oz but remain suppressed from current levels or break lower into a pocket between USD 2,000/t.oz and USD 1,760/t.oz.
Which of these three is most likely? Evidence suggests it could be the third scenario due to global supply constraints weakening demand for Palladium.
Does Palladium have the capacity to fall further?
In the short term, it seems likely. Palladium’s principal use is in catalytic converters of automobiles. Car manufacturers are experiencing supply chain bottlenecks (chiefly related to silicon chips), severely hampering their ability to deliver a typical number of new cars. Naturally, the need for catalytic converters has declined hand-in-hand with the decline seen in production capacity.
How long will the bottleneck in auto manufacturers’ supply chain last?
The bottlenecks are expected to get worse before they get better. This is one short-term factor working in opposition to palladium prices.
According to Intel (NASDAQ: INTC) CEO Pat Gelsinger, it might be two years before silicon chip shortages are overcome. Likewise, BMW’s (ETR: BMW) CEO, Oliver Zipse, sees chips being in short supply for at least the next 6-12 months.
85% of Palladium that is mined ends up in catalytic converters. As such, the mineral is heavily dependent on the automobile industry for its pricing. It might not be until the point in time that car production is ramped up, that the price of Palladium will find higher and more definitive levels of support. Palladium’s supply-demand ratio has been in deficit for the past decade, so we might expect a positive medium-term outlook for the mineral.
Extra, Extra! Gold Analysis!
While BlackBull Markets does not offer the option to trade Palladium, we do offer a cache of other commodities, including the always popular gold. For this week’s technical analysis of gold, Anish Lal breaks down gold’s positive momentum on the hourly chart.
In today’s article, I would like to introduce you to the Stock Exchange of Hong Kong Stock (HKEX). The HKEX, with a market capitalisation of 6 trillion USD, is Asia’s third-largest stock exchange and the sixth-largest in the world. More than 2,500 companies are listed on the HKEX, half of which are mainland Chinese companies.
Inflation data from outside the US should pique traders interest this week. Several major economies will be reporting on actual inflation figures experienced during September 2021. Will they match their forecasted values, or will the data follow US inflation and surprisingly creep upward?
This year, a word that has entered the vocabulary of many investors is SPAC, short for Special Purpose Acquisition Company. Yet, for some, what a SPAC exactly is and for what it is suitable, remains a mystery. Since emerging in the 1990s, SPACs have primarily remained a fringe financial product. That is, until last year when their popularity exploded in the US. In 2020, SPACs raised more than US $82 billion. Not to be outdone, 2021 eclipsed this value by April and has since gone on to raise more than US $120 billion. In contrast, SPACs raised a comparatively tiny US $13.6 billion in 2019.
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