Palladium price forecast for 2021: should we expect a further rally?

Palladium spot price rises from 2021

The spot price of palladium has been rising steadily since 2021. And during this period, its price increased by 398.25%, making it one of the most profitable commodities. According to the results, palladium outperformed gold, silver and platinum.

Comparison of metals by their profitability

The chart above shows the return of precious metals relative to the time it took (duration).

Spot palladium prices have risen more than 398% in six years. By comparison, gold prices have gained just over 200% over the same period.

But what will the cost of palladium be in the future? And what is the palladium price forecast for 2021 and beyond?

Charts can look very attractive, but traders should always be careful. Given the continued strong movement in the palladium market, a correction cannot be ruled out. Investors should wonder whether the spot price of palladium has peaked. This question is difficult to answer with a definitive yes or no because there are many factors involved.

Let's analyze what is happening in the palladium market now, and what the cost of palladium may be in the future.

What is more profitable to invest in: all the pros and cons

Investing in gold allows you to save money in the long term. The following advantages of purchasing this precious metal can be noted:

• has high liquidity (gold, like any other non-renewable asset, will not depreciate; it can be sold at any time, albeit with minimal losses);
• The price of gold is rising slowly, but the upward trend is stable.

Among the shortcomings, experts note:

• the need to make long-term investments;
• low profitability (buying gold is not the most profitable instrument);
• increased spread (with minimal investments, you will have to wait for active growth of quotes to generate income);
• large range of profits and losses.

Citigroup analysts expect the price of gold to rise at a record pace in 2021. Weak demand for jewelry may limit the dynamics, but the trend will still remain upward.

The growth rate of gold prices over the past 20 years.
Benefits of investing in palladium:

• during periods of economic growth, it can show better results than the market;
• will rise in price in the long term (like any other non-renewable asset).

According to Moody's, palladium prices will rise in 2021. Main reasons:

• the increase in demand for cars in the United States is mainly due to SUVs, the production of which requires more palladium;
• RDE tests have been introduced in Europe, similar measures can be expected in other countries;
• China has switched to a new environmental standard, as a result of which the production of 1 car will require 5-7% more palladium than before.

Palladium price growth rate over the past 5 years.
The disadvantages of investing in palladium are:

• the difficulty of forecasting (because growth factors do not relate directly to the financial market);
• a sharp and severe decline during the global crisis;
• speculative demand from investors.

What's behind the strong rally in palladium prices?

Demand from the automotive sector has been growing in recent years due to stricter emissions legislation in Europe and China. Most of the world's palladium supply is used in vehicle catalytic converters to control exhaust emissions. Thus, increased demand is driving up palladium prices.

Speaking to Bloomberg in April, Tai Wong, head of metals derivatives at BMO Capital Markets, said: “A number of factors are responsible for palladium's performance. Essentially, there will be material shortages this year and automakers need to rebuild their inventories.”

As climate change becomes a growing concern, vehicle manufacturers are moving towards greener and more eco-friendly designs with the launch of new electric vehicle (EV) models. However, it may take years to create a full-fledged electric vehicle market. And palladium is used in hybrid cars, for which demand is growing.

Also, the rise in palladium prices is a result of broader economic peaks and valleys. After losing more than 49% in 2008 during the recession, palladium prices have recovered along with the global economy.

What does palladium look like in nature?

Nuggets are not found in nature in their pure form. Metal particles are extracted along with other minerals. According to approximate data, there are approximately 30 elements that come into contact with palladium.

Externally, grains of the precious metal are very similar to platinum. In some deposits, these two elements are mined together (called palladium platinum) and then separated by chemical processing. Also, veins can intersect with gold, then a combination of two metals is observed (for example, palladium gold or porpecite from Brazil).

The process of formation in nature

The main source of appearance is space fragments of meteorites. A large content of precious metal crystals was found in iron and stone types of alien fragments.

Structure, chemical and physical properties

By its nature, the mineral compares favorably with other precious metals with its low density and chemical inertness. Thanks to the latter property, it does not interact with other elements and does not oxidize.

Reactions:

1. Exceptions are silicon, boron, sulfur, chromium, with which palladium forms chemical compounds.
2. Also, metal crystals dissolve in “regia vodka” (this is a mixture of two acids - sulfuric and nitric).

Expert opinion

Vsevolod Kozlovsky

6 years in jewelry making. Knows everything about samples and can identify a fake in 12 seconds

In appearance, the nuggets are similar to platinum and silver. The metal is very ductile, which is why it is actively used in jewelry. To improve strength and wear resistance, it is used in compounds with other metals.

The melting point is 1554 degrees Celsius.

Post-pandemic recovery

In 2021, restrictions caused by COVID-19 negatively impacted automobile production, reducing production rates by 15% for the year. As the automotive market recovers, the price of palladium is once again gaining momentum.

There are no specific threats to palladium spot prices in the near future. China remains a major player in commodity markets and its recovery from the pandemic is well underway.

It is also worth considering the strength of the US dollar - palladium transactions are always settled in US currency, so its relative strength also affects the price of palladium.

The chart below shows the US Dollar Index compared to palladium prices.

Palladium prices vs dollar index

The chart shows how the sharp rise in the value of the US dollar (USD) in March 2021 led to a corresponding sharp decline in palladium prices.

At the moment, the US dollar is steadily declining. While there is room for recovery in the short term, upside potential is limited. This is a good sign for palladium prices.

Areas of application

The element widely uses:

1. Chemical industry. Pd is a popular catalyst in oil refining and fat refining. Palladium chloride is also involved in the search for trace amounts of carbon monoxide in the air or gas mixtures. In electrochemistry, the same compound is an activating substance in the galvanic metallization of dielectrics. Palladium membranes are needed for hydrogen purification.
2. Electrical engineering. The metal is important as a coating that is resistant to sulfides: the manufacture of high-precision voltagometers. Its physical characteristics have led to its use in the production of ceramic capacitors.
3. Jewelry making. Palladium is added to products to create white gold. Even a small metal content in the alloy changes the shade of the item from yellow to silver-white. Occasionally, the mineral is used in the manufacture of commemorative coins.
4. Medicine. Palladium is added to drugs intended to combat tumors and cancer therapy. Another area where metal is used is dentistry. Here, dentures are made on its basis. Alloys with the addition of palladium are used to create individual parts of pacemakers and medical instruments.

Palladium price news and forecasts

If you've been keeping an eye on spot palladium prices, you'll want to keep an eye on the news.

Below are some factors to consider when trading palladium.

• Norilsk Nickel (Norilsk Nickel) is the largest palladium mining company. Therefore, it is worth monitoring Norilsk Nickel's mining data. This will give you an idea of ​​the palladium supply situation. Thus, in April the company raised its forecast for 2021.
• Russia and South Africa are the two largest palladium producing countries. Therefore, logistics, supply and international trade relations play a key role in determining palladium prices. Traders need to keep an eye on geopolitical developments in these countries.
• Monitoring and regulating emissions is also critical to predicting palladium prices. This may vary from country to country. The US, European Union, China and India are the largest markets for palladium, so it is prudent to monitor emissions regulation news in these regions.

How are palladium veins found?

Mineral inclusions are sought primarily in the locations of silver, copper and nickel ores. Occasionally there are small deposits with nuggets of pure metal.

Palladium satellites

In the bowels of the earth, palladium is found exclusively in the form of compounds with other minerals. Some of them have been little studied to this day and have no name. The most famous satellites of the precious metal are:

• braggite;
• palladite;
• potarit;
• stannopalladite.

It is also often extracted from gold and platinum veins.

Where does palladium occur in nature?

Under natural conditions of the earth's interior, the mineral is found in the form of compounds of different metals. Similar veins are found in Europe, the Russian Federation, and America.

Palladium price forecast for 2021 – 2022

While the long-term price outlook for palladium is for prices to rise, there is enough volatility to offer attractive opportunities for short-term traders.

The following palladium price chart shows the metal forming a sideways range between USD 2,500 and USD 2,160. But after trading in this range for almost seven months, prices broke out and rose to an all-time high of $3,000.

Palladium

Prices are currently declining, but upward momentum remains resilient. As long as the price of palladium remains at $2,500, further growth can be expected.

The medium-term trend is likely to change only if we see a sustained decline below the 2160 USD level.

This will open the door for palladium prices to fall by as much as 44% from an all-time high of $3,000. But this can only happen in a very bearish scenario and if something goes completely wrong.

There is currently a severe palladium supply shortage. And until this shortage is eliminated or demand for it falls, prices may remain high.

Global supply and demand for palladium 0

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Extraction methods

Work with palladium deposits is carried out in two forms:

1. closed (mine);
2. open (career).

In the first case, a system of underground tunnels - mines - is created for the extraction of precious metals. Small holes are created in the found ore layer, into which explosives are then placed. The soil loosened by the explosion is processed mechanically or manually to extract palladium particles. Once the initial refining is complete, the ore is transported to the surface and then transported to further processing.

In the second case, heavy earth-moving equipment and vehicles are used to transport the extracted ore. With its help, a soil quarry is developed, from which palladium is then extracted. It is then transported for processing to the appropriate enterprises.

How to spot a fake

It is almost impossible to distinguish palladium from other metals by eye.

If there is any doubt about the authenticity of the metal, it is recommended to show it to an independent jeweler appraiser. You can be sure that you are holding real jewelry in your hands if over time they have not lost their attractiveness and shine. If the jewelry begins to darken, this is definitely a fake.

Advantages and disadvantages of metal

First of all, the demand for palladium is determined by its physical characteristics:

1. Compared to platinum, it has less weight, and therefore jewelry based on it, even large ones, are not heavy at all. Moreover, its strength is much higher than that of gold. This allows it to be used as a setting for large jewelry stones. Over time, such decorations do not darken and do not lose their attractiveness.
2. Another undeniable advantage of palladium is its incredible external similarity to platinum. At the same time, its cost is much lower. According to rough estimates, the cost of 1 gram of metal is 2-3 times lower than that of gold or platinum.

As part of the alloy, palladium is resistant to wear, deformation, and scratches. However, pure metal has exactly the opposite properties, and therefore is used in rare cases, for example, for making exclusive jewelry. Palladium-based wedding rings are especially in demand. It is often used instead of nickel, providing a similar effect without causing an allergic reaction.

Reviews

Katerina: “It just so happens that I love jewelry, especially rings. Knowing this passion of mine, my family constantly gives me something new. I also have several rings, both palladium and platinum. And I like the first ones much more. Firstly, they are lighter and do not feel much when worn. Secondly, I like their color better. Well, if you buy it yourself, palladium rings are much cheaper than platinum.”

Svetlana: “Palladium jewelry is good for everyone, except for one thing - it’s almost impossible to find them. I had to scour more than one store and online resources to find what I needed. In theory, it was possible to buy the same white gold based on palladium, but in fact very few of them are made. Basically, everything is a regular gold alloy with rhodium plating. I wish there was a better choice."

Types of alloys and samples

Since palladium in its pure form is too soft, alloys based on it are used to make jewelry.

In Russia, two samples are legally approved - 500 and 850. The alloys used are nickel, silver and copper. 950 standard is also popular abroad. In this case, 95% palladium accounts for 5% copper or ruthenium additives. Occasionally they are replaced with nickel to provide greater strength to the alloy.

Sample correspondence table

Palladium alloys approved in Russia are prescribed in GOST. The composition and amount of ligature in each of them can be tracked using the table presented here.

Tips for choosing palladium jewelry

Make sure that the jewelry is marked with an indication of the purity (500 or 850).

The silvery-white color of the metal goes better with diamonds, sapphires, amethysts, labradorite and aquamarines.

When choosing wedding rings, pay attention to the shape of the inner surface. For comfortable wearing, it should be slightly curved.

What radio components contain

In radio engineering, palladium is often found in the following parts:

• connectors;
• capacitors;
• resistors.

First of all, this concerns devices that are important in the military and space industries. In civil engineering, palladium is used only in aviation.

How to distinguish palladium from platinum in radio components

At home, distinguishing two precious metals is difficult, but possible. The easiest way is to drop a small sample into a container of nitric acid. If the metal dissolves, you have palladium.

Another method involves using a touchstone, potassium iodide and aqua regia. A metal sample is passed along the edge of the stone until a scratch is formed. Then a mixture of potassium iodide and aqua regia is poured into it. If the scratch is painted red with a brown tint, we can say that the presented sample is palladium.

Ways to isolate metal

Options:

1. Electrolytic reaction. Refining involves the use of sulfuric acid, which will separate the palladium compounds, leaving the brass and copper elements intact. Aqua regia will help extract pure metal after the reaction is complete.
2. Ammonia solution and hydrochloric acid also help to isolate palladium. The color of the precious metal plays an important role in the refining process. For example, brown confirms the presence of palladium in the alloy.

Also watch the video below about what else you can get palladium from:

Historical reference

Until the late 1990s, palladium traded at around $200–$300. And then there was a strong bull run, driven in part by the increased use of palladium in the computer industry. The price then crossed the $1,000 mark for the first time, but returned to its usual range in the early 2000s.

During the 2008 crisis, palladium did not rise as much as gold, but traded in a slow but steady uptrend. This signaled an increase in its value as a commodity in demand as the global economy recovered from the 2008–09 economic crisis. The tariff conflict between the US and China, which began in 2021, allowed palladium to rise higher - it became clear that a trade war was underway.

Palladium has begun to emerge as a safe-haven commodity, becoming extremely bullish during times of uncertainty. This was confirmed in January-February 2021, when the pandemic hit China. The price fluctuated during March-April, but resumed its upward trend in July, thereby confirming its “safe haven” status.

Therefore, when trading palladium, we must first understand whether it behaves as a commodity or as a “safe haven”. And this is a long-term process, so you shouldn’t make quick decisions.

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