Palladium: Price, Charts, Overview and How to Invest
As a long-term investment or short-term trading instrument, Palladium has become an increasingly popular investment in recent years, not least because of its rapid rise in value but also because of critical advantages over other precious metals such as gold.
But what is Palladium and what are its benefits from an investor's perspective? This article will provide the answers. We will also go through palladium forecast, valuable trading tips, and how to trade the precious metal in ideal conditions.
What is Palladium? Definition and Overview
Palladium is a scarce metal and therefore equally valuable. Due to the scarcity of deposits and the high demand in recent years, its use has seen a sharp increase in demand and, therefore increase the Palladium value.
It shares characteristics with white gold and platinum, but unlike the latter, it has malleability and ductility very close to that of gold. Among precious metals, it is undoubtedly one of the lesser-known, even though its notoriety and economic efficiency are now becoming increasingly evident.
Palladium is used to perform a number of functions:
- It is used in the production of motor vehicles catalytic converters, because of its ability to accelerate chemical reactions and filter toxic exhaust gases.
- Palladium is also part of the manufacture of jewellery, to replace nickel which the European Union banned in 2000 for health reasons.
- It is also used in the production of cell phones components, in the dental industry to make dental alloys and even in the chemical industry to manufacture synthetic fibres.
XPDUSD Price History and Price Today
Let’s now study the historical evolution of the price of Palladium and its current price context.
Palladium Price Historical
Let's look at the major stages in the evolution of the price of Palladium per ounce up to the present day. Note that the Palladium price per gram is rarely used for investment purpose.
Between 1998 and 2001, palladium followed a powerful upward trend. Indeed, it went from 200 dollars to 1100 dollars per ounce. The price of Palladium then took 2 years to strongly correct, returning to a low of $144 mid 2003.
Palladium then went through a long uptrend with regular corrections, finally breaking back above the key $1,000 mark in 2017. Then, the uptrend in Palladium accelerated sharply in 2018, until an all-time high of $2875 in February 2020. The coronavirus pandemic then caused Palladium value to halve in under 2 months. However, the precious metal quickly recovered and even market a new ATH of above $3,000 in May 2021.
Since then, Palladium has collapsed below $2,000. But despite the magnitude of this correction, the long-term uptrend hasn’t been challenged. Moreover, indications show palladium may have found long-term support and could be on the verge of starting a new uptrend. It thus may be ideal to buy Palladium now as far as long-term investors are concerned.
What Influences the Price of Palladium?
The price of Palladium moves essentially as a function of supply and demand. A decrease in demand or an increase in supply pulls the Palladium price down, and an increased demand or a decreased supply pulls it up. To understand the evolution of this highly volatile market, it is worth keeping an eye on the jewellery and automotive industries.
Among the main factors influencing the price of the metal we find:
- The scarce supply of Palladium makes this market extremely volatile. Two countries dominate its world production, with 50% coming from Russia and 30% from South Africa. This implies a risk factor, because an event affecting one of these two countries can strongly impact the Palladium market. It is therefore essential to monitor the production and export policy of these two Palladium producing countries.
- 60% of palladium production goes to the automotive industry. So as car purchases increase, so will the price of palladium. It is thus essential to follow the major automotive markets that use palladium, namely China, Japan, and the USA. Note that most cars manufactured in Europe use platinum, not palladium.
- Palladium is quoted in U.S. dollars, and there is a negative correlation between USD and palladium. If the dollar falls, the price of palladium rises - and vice versa.
- A rise or fall in stock levels of major exporting countries can strongly impact the price of Palladium. Low stocks can create pressure on the palladium metal price in case of high demand, and high stocks can cause its price to fall in case of low world demand.
To properly understand how to invest in Palladium, we need to look at its long-term chart and technical context. This is what we will do now, based on the monthly XPDUSD hart below.
This chart shows that, after a low below $1500 when the pandemic started in March 2020, the Palladium price has doubled in a year, rising above $3000 in April 2021. However, it turns out that price may have risen too much, too fast.
Indeed, following this record high, the precious metal entered a violent correction, bringing the Palladium price today below $2000. This violent fall led to a break below a bullish trend line supporting the Palladium metal price rise since mid-2018.
This said, the commodity enjoys the support of long-term support just above $1800 per ounce, which suggests that correction is over. Thus, this sharp fall can be seen as a correction of an exaggerated rise. This, it could be an excellent time to buy Palladium.
Why Invest in Palladium Today? Points to Consider
Although not as well-known as such as gold, silver or platinum, Palladium remains a good investment opportunity. Here’s why more and more people are turning to trading this precious metal:
- As seen above, Palladium serves many industrial uses. This ensures a certain level of demand, unlike other precious metals that are less essential in the industry.
- Like gold, Palladium is a protection against inflation. Inflation, if not followed by a rise in policy rates, generates negative real interest rates. Palladium, moves against the tide of real interest rates, therefore acting as a hedge.
- Of the sources of industrial demand for Palladium, the automotive industry is perhaps the most important. Given the favorable outlook for the automotive sector, there is every reason to believe XPDUSD prices will continue to rise.
- In addition to increasing demand, Palladium is expected to face decreasing supply. Being limited supply, it is becoming increasingly expensive to mine.
- Finally, as we have explained, Palladium prices has recently fallen. However, we have also shown that this should soon be reversed. Thus, the medium-term outlook for Palladium is very positive.
Where Can I Trade Palladium?
To trade this metal easily, you need to first choose a regulated, reliable and cost-efficient broker, like ZFX. ZFX is a world class MT4 broker which allows its clients to trade palladium in just a few simple steps, as well as many stocks, indices, forex and commodities.
How to Trade Palladium Easily
Buying Palladium through ZFX is simple and fast. Indeed, the account opening is done entirely online, and takes only a few minutes. All you have to do is follow these steps.
1 - Register with ZFX
You first need to go to the ZFX website, and click on "Open an account". You will then have to fill in a registration form with your personal details. This includes your phone number, which will be verified by SMS.
After filling out the form, click on "Next" at the bottom of the page. Immediately after, ZFX will display your MT4 login and password, and invite you to download the platform. You will need this later, when you start investing in palladium.
2 - Make your first deposit
To do this, click on "Make a deposit" on the screen displayed after registration. You will then have to choose a payment method: bank transfer or credit card.
Here, you will need to indicate the deposit amount and then click on "Confirm Deposit". You will then be asked for your credit card information before the final validation of the payment.
3 - Account verification
Finally, you’ll need to get your account verified, by sending documents to prove your identity and banking details.
As shown in the image above, you simple need to upload the documents to the ZFX website.
4 - Buy Palladium
Once your documents are validated, you will then be ready to buy XPDUSD. To do so, download the MT4 platform and use your logins to access the platform. There, you will be able to invest in palladium and all the other commodities and assets offered by ZFX.
Things to Know Before Trading Palladium
We will now provide valuable tips to help you get started trading Palladium in the right way.
- Technical analysis allows you to study the trend and make price, based solely on charts. It will show you buy and sell signals and help you to determine precisely where to position your targets. It is especially essential for short-term traders, as their daily work often centers on this discipline.
- As explained above, demand for Palladium comes primarily from car manufacturers. Therefore, the health of the automotive industry can directly influence the metal’s price. If the automotive market is doing well, Palladium is a bullish factor.
- Demo accounts allow you to practice trading without the risk of losing money. ZFX offers this possibility to test their platform with virtual funds. This is an ideal opportunity to fine-tune your trading method before actually applying it in the markets.
- For trading palladium or any financial asset, make sure to choose a good broker with a powerful platform, reasonable fees and impeccable security. ZFX checks all these boxes.
- It may be useful to keep a trading journal to record your trades and their reasons. This allows you to study your activities in hindsight, to see what works and what doesn't. This is a good way to refine your Palladium trading strategy and to keep improving it.
Finally, note that there are several options for investing in Palladium : Palladium Futures, Palladium ETF, and Palladium CFD. The most convenient and cheapest way to trade Palladium is through CFDs, which allow you to take advantage of leverage and to short Palladium.
Palladium Forecast, Future, and Prediction
Let’s now look at the palladium forecast based on economic and technical analyses.
XPDUSD Forecast: Demand Will Like Explode
The metal's price has fallen sharply in recent months, which may make investors wary. However, the reason for this violent fall is obvious. Indeed, 80% of the world's demand for Palladium comes from the automotive industry, which uses it as a catalyst. However, a shortage of components has paralyzed the automotive industry for several months.
As a result, carmakers have emptied their stocks to meet demand. This means that they will have to produce a lot and very quickly once the shortage crisis is over, to replenish their stocks while facing a demand that is expected to grow thanks to the post-pandemic recovery.
From a Palladium perspective, this guarantees an explosion in demand from the automotive industry over the next few months. This should have a powerful bullish impact on the Palladium price.
Palladium Forecast: Technical Analysis
Let's now look at the outlook for the metal from a technical analysis point of view, using the weekly Palladium price chart.
We can see that the fall of Palladium in recent months has resulted in a break below a long-term uptrend line, visible since mid-2018. In addition, the commodity has also broken below its 50 and 100-week moving averages during this correction.
However, despite these bearish signals, other chart factors suggest that the correction may be over and that XPDUSD price today may be ideal for buying.
Bottom Line: Is Palladium a Good Investment Now?
Palladium is a unique investment in many ways. It shares strong points with gold, the king of precious metals. Indeed, its high industrial use makes it a metal that has real utility and is a store of value and a protection against inflation. And for short-term traders, the metal's volatility guarantees exciting daily opportunities.
We have also seen that the outlook for XPDUSD is favourable, both from a fundamental and technical analysis perspective. Furthermore, the timing seems to be ideal for buying Palladium at the moment. Indeed it has fallen a lot in the last few months, but all indications are that this correction is over and that a new long-term bullish phase is in the making.
Ready to add palladium to your investment portfolio? If so, sign up to the broker ZFX without delay to invest in a few simple steps. ZFX offers the very efficient MT4 platform as well as competitive fees. It is also a solidly regulated broker, and its wide asset catalogue will allow you to effortlessly diversify your portfolio.