Palladium was one of the top performing metals in recent years gaining 151% in value in the two-year period from January 2016 through January 2018, rising to a record $1,139 an ounce. But in the past three months, the metal has reversed its uptrend and has declined sharply, losing some 20% in value to an eight-month low at just above $900 an ounce last week.
However: The metal also returned briefly to a discount to platinum after trading at a premium over the past seven months. Palladium has been the metal of choice in autocatalyst manufacture as growth in the global vehicle industry accelerated in recent years. The metal also benefited from the more recent falloff in demand for diesel-powered vehicles particularly in Europe with the consequent increase in sales of gas-powered vehicles.
As forecasts of year-on-year growth in global auto sales have slowed, however, so has the projected potential reward and subsequent interest of spec investors which have now allowed valuations to move more in line with underlying commercial demand. As a proxy for speculative interests, non-commercial longs as reported by the CFTC have fallen by more than half since the start of the year or the equivalent of 1.6 million ounces. The metal reversed losses in the new week, rising higher to near $940 an ounce, but another challenge to support at $900 an ounce may be possible in the near-term.
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