In 2022, Russia’s invasion of Ukraine sparked concerns about palladium supply, leading to a surge in prices. However, palladium had been on an upward trajectory since hitting a low in 2008. Back in May 2024, palladium was trading at over $1,000 per ounce, offering an alternative for value investors seeking exposure to precious metals.
Despite a drop in prices in 2024, palladium futures continued to hover around the $1,000 mark. The significant price plunge from the 2022 high to the 2024 low led to consolidation in palladium prices, with the metal struggling to break free from the $1,000 level.
Russia maintained its position as the leading palladium producer in 2024, contributing a substantial portion of the global output. South Africa closely followed, primarily extracting palladium from deep mines. The production dynamics in these two key countries play a crucial role in the global palladium market.
Palladium’s unique properties make it essential for various industries, especially in oil refining and catalytic converters for automobiles. With shifts in U.S. energy policies favoring traditional vehicles, the demand for palladium is expected to rise, further impacting its price and market dynamics.
Compared to other precious metals, palladium futures exhibit lower liquidity, leading to higher volatility. The historical volatility levels of palladium hint at its tendency for price fluctuations, making it a challenging asset to trade due to its limited liquidity.
The Aberdeen Physical Palladium ETF, PALL, offers investors exposure to physical palladium bullion, presenting an alternative to trading futures. The recent rally in palladium futures and the performance of PALL indicate the potential for price corrections and opportunities in the palladium market.
As palladium remains relatively affordable compared to gold and silver, accumulating the metal at its current price point could prove to be a strategic move. With projections favoring higher prices in the future, investors may find value in adding palladium to their portfolios for potential long-term gains.
While the palladium market faces challenges at the $1,000 level, the historical context and industry dynamics suggest opportunities for growth and price appreciation in the coming months and years. Understanding the factors influencing palladium prices is essential for investors looking to navigate the complexities of the precious metals market.