The palladium price continues higher for one more day adding 1.94% at $2528 to fresh record highs. Palladium is in massive demand for the first weeks of 2020 as the precious metal is adding almost 25%. The four-year rally has accelerated the last trading sessions as the supply can’t cover the demand of palladium in engine exhausts.
Palladium Fundamentals Are Strong
The amount of palladium produced in 2019 is well below the demand for the eighth year in a row. Last week South Africa which produces about 40% of the global supply said it’s output dropped by 13.5% in November.
The demand side is getting a boost from strict regulations after the diesel scandal in Europe and consumers shifting away from diesel cars which use platinum to petrol engine vehicles which use palladium. China has also imposed stricter rules and now require a 30% more palladium per car.
Read our Best Trading Ideas for 2020.
Palladium Technical Analysis
Palladium strong uptrend started in August 2019 after a correction from the July highs at $1549 down to $1380. The Palladium outlook is clearly bullish. A warning signal for buyers is that the precious metal has reached an extreme overbought level. The RSI 14 index is now at 93.14, and hovers above the overbought level of 70 for over two weeks without any pullback.
On the upside minor resistance would be met at $2530 the daily and all-time high. Above that level the $2600 psychological mark will be the next resistance zone.
On the downside, immediate support for Palladium stands at $2478 the daily low. Friday’s low at $2313 will provide the next support area. A break below might open the way for a move down to $2192 the low from January 15th.