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.
For many first-time investors, some financial market terminology can be confusing. A question that often crops up is ‘what is the difference between the Nasdaq and the nasdaq100?’. Effectively this question can be answered by defining the difference between a ‘stock exchange’ and a ‘stock exchange index’.
Traders that have taken a long position on Natural Gas will have been feeling lighter than air for the better part of 2021. Remarkably, the trading price of Natural Gas has rocketed up 115% since the beginning of the year, outperforming price increases in other commodities currently sitting close to record highs, Oats (up by 63.83% YTD), Copper (up by 19.65% YTD), and steel (up by 38.27% YTD). As of writing, Natural Gas is trading at $5.592 per million British thermal units, a thirteen year high for the commodity.
If asked to list as many Stock Exchanges as possible in thirty seconds, I bet many would struggle after naming five. I personally would start with the two major US Exchanges, the Nasdaq and the New York Stock Exchange (NYSE). The next three would be made up of the London Stock Exchange (LSE), The Tokyo Stock Exchange (TYO), and The Toronto Stock Exchange (TSE). At least, these are the Exchanges that first come to my mind. If I’m quick enough, I may be able to blurt out The Hong Kong Stock Exchange (HKG), The Shanghai Stock Exchange (SSE), and the Australian Securities Exchange (ASX).
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