Palladium record-breaking rally continues – metal surges 30% this year

Investors worry that metal has risen too high, too fast

File photo. Photograph: Epa/Mariscal

File photo. Photograph: Epa/Mariscal

 

Palladium continued its record-breaking rally even as investors considered whether the metal has risen too high, too fast.

The metal flipped to gains after initially falling almost 3 per cent Monday, despite technicals continuing to signal that a pullback may be due. Spot prices reached an all-time high of $2,577.27 (€2,325) an ounce as tight supply conditions show little signs of easing.

Palladium is in a “real sweet spot” of recovering industrial production globally, improving demand due to strong car sales, and constrained mine supply, said Wayne Gordon, executive director for commodities and foreign exchange at UBS Global Wealth Management.

So far this year, the metal has surged about 30 per cent. The metal’s surge is rooted in positive fundamentals, with production trailing demand as stricter emissions standards boost consumption by carmakers. Another factor is that producers don’t have the capacity to boost output easily in response to price increases because palladium is largely mined as a byproduct.

The speed and scope of palladium’s gains have surprised market watchers, with some warning that prices may have gone too high, too fast. – Bloomberg