Palladium Prices Set New Record High Last Week

Palladium prices set a new record high early last week of $1,139 an ounce before easing lower as the supply deficit in the market is projected to widen over the intermediate term.

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Consumption of palladium in the manufacture of catalytic converters already outstrips annual primary supplies of the metal. And as global vehicle sales will be a product of economic expansion, so will the price performance of palladium be directed by the growth in world output. In sequence, palladium prices will also be influenced by changes in equity values, another proxy for world growth.

As the chart below illustrates, the palladium price has been increasing with, but at a greater pace than, the S&P 500 Index in recent years. A measure of the linear relationship between these two variables produces a simple correlation coefficient of 0.95, indicating that the S&P 500 Index and palladium prices are highly positively correlated for this period.

Most market analysts have cautioned that a temporary correction in the steady rise in global equity prices may be overdue and that a 10% to 20% pullback is possible; economists and market analysts, on the whole, remain bullish on equities over the intermediate term, however. But should equities face a bout of profit taking at some point in the months ahead, palladium prices could be vulnerable as well.

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Also in this week’s Platinum Market Review:

-Platinum prices tested the $1,000 an ounce barrier more than once last week before climbing convincingly above the mark to $1,020 an ounce

-EU new car registrations rose to 15.14 million units in 2017

-Rhodium prices remain firm at just below $1,700 an ounce for the third consecutive week

-Gold prices gained as much as $12 an ounce at one point on Friday in reaction to the US government impasse that led to a shutdown, the first in five years.

-The World Gold Council cited four overlying trends that should be supportive of gold prices in 2018

Click HERE to read the January 22, 2018 Platinum Market Review

Disclaimer: 

Material contained in this report is based upon publicly available market data believed to be accurate and reliable and is presented for informational purposes only. KMR assumes no warranty or liability for its completeness, nor guarantees future market performance. Further, KMR assumes no liability for direct or indirect loss or damage from the use of information contained in this report, or from any unforeseen errors or omissions.

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About the author

Patrick Magilligan

PGM sales veteran Pat Magilligan is the Director of PGM Marketing at Key Metal Refining LLC. Magilligan has over three decades of experience in commodities trading, sales, and research, working with the likes of Merrill Lynch, Prudential Securities, and A-1 Specialized Services & Supplies Inc.