The Nornickel supply deficit continues to be the talk of the market and it appears to be the sole fundamental factor driving the upside price action.
There is market talk of the largest physical palladium holding ETF selling some of its inventory to remedy the expected supply deficit for 2021. With the palladium market only being supplied by a few major players, it is not hard to see why the Nornickel situation has impacted palladium prices very strongly.
The rebound in industrial activity following the vaccination campaigns against the coronavirus is expected to exert a strong demand-pull, which would result in higher prices for 2021.
There is a particularly strong association between the automotive industries and palladium consumption. It would seem that the gain in palladium prices is also having an unwanted knock-on effect in Iowa and some parts of the US, where cases of theft of car catalytic converters are reportedly on the rise. These vehicle exhaust components are used as a filtering system for exhaust fumes but are prized for their metal components, which include palladium, platinum and rhodium.
Technical Outlook for Palladium
The previous symmetrical triangle was rearranged by subsequent price action into an ascending triangle. The upper border of this new triangle is under threat, as the price tested it once on Friday but was beat back. A break above this resistance allows bulls to push Palladium prices towards 2727.82, with an initial pitstop close to 2680.00.
On the other hand, a downside break of the triangle which takes the price below 2596.36 invalidates the pattern, and also allows bears to potentially target the upper border of the rectangle at the 2500.00 psychological mark.
Palladium Chart (4-Hour)