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Palladium price collapses in spring
Recovery: since Corona low + 50%
Outlook should remain positive in the long term
Before the Corona crisis, the price of the platinum metal rose to a high of 2,856 dollars. In the spring, however, palladium was not spared from the corona crash and fell to $ 1,598. Since then the price has been able to recover – although it is still a little way from pre-crisis levels.
Automotive industry as an important driver
Palladium, along with platinum, rhodium, ruthenium, iridium and osmium, belongs to the group of platinum metals and is primarily used in the automotive industry. There the noble metal is mainly used in catalytic converters for gasoline engines. Previously, platinum was used for catalyst technology in this area. Since the palladium price was well below that of platinum a few years ago, the automotive industry decided to switch to the cheaper precious metal. Today the situation is different: while platinum has now risen to a level like in 2009 or 2006 after rising in recent years, the price of palladium has risen steeply in recent years. The palladium price is currently more than 2,400 dollars, well above the platinum price, which is currently just under 870 dollars (as of November 11, 2020).
Above all, the increasing demand from the automotive industry on the one hand and the deficit in supply on the other hand may have led to the continuous rise in the palladium price in recent years. The precious metal is benefiting from the fact that many motorists have switched from diesel (where platinum is still used for catalytic converters) to gasoline. A noticeable drop in demand and the associated negative impact on the palladium price due to the switch to electric vehicles have so far not been seen due to the faltering change in the automotive market.
Long-term positive sentiment for palladium
The Corona crisis could now cause concern, as palladium is an industrial metal that – unlike gold, which is considered a safe haven in times of crisis – is very dependent on the economy because of its use in the automotive industry. However, car sales in Europe, China and the USA were able to recover from their interim lows caused by the Corona crisis faster than expected.
As with many other assets, the price of palladium plummeted in the spring. In the past few months, the precious metal has not really been able to follow up on its steep upward movement from pre-crisis times – corrections followed interim increases. Nevertheless, since its low of $ 1,598, palladium has now risen by around 50 percent to $ 2,439. For comparison: the price of gold has increased by around 28 percent to $ 1,857 since its corona crash low of $ 1,451. Silver has almost doubled its value of $ 12.04 since the Corona crash and is currently at $ 23.83 (as of November 11, 2020).
As reported by invezz.com, sentiment for palladium should remain positive over the long term. The current resistance levels are currently at $ 2,300, 2,400 and $ 2,500, while the current support levels are at $ 2,200, $ 2,100 and $ 2,000. A rise above 2,300 and 2,400 dollars, as it has recently occurred, is a signal to buy palladium and supports the continuation of the upward trend. The next target price could now be $ 2,500. On the other hand, it should be interpreted as a strong sell signal if the palladium price falls below the $ 2,000 mark, because then the way to $ 1,800 is free.
Finanzen.net editorial team
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