Palladium is one of the rarest precious metals and is mostly used for industrial and electronic purposes. The greatest industrial use for the shiny metal is in catalytic converters for automobiles as it absorbs hazardous fuel emissions. The metal is harder and more durable than platinum. Palladium is also heavily used in modern industry. It is used for the production of hybrid cars and has applications in solar energy and fuel cells systems and products. Palladium has become a popular investment option as in 2019 the price of the precious metal increased above the price of gold.
Why Trade Palladium
Investors trade palladium to diversify their portfolio and hedge it against currency weakness (like the devaluation of the dollar) and fluctuations in the stock markets. Also, palladium and other precious metals are seen as safe haven as they could keep their value during times of global unrest and periods of high inflation.
What Affects Palladium Price
Palladium spot price can move fast and significantly. The prices of the precious metal can be influenced by its industrial and investment demand. As it has already been mentioned, palladium is used to produce catalytic converters and has applications in hybrid cars production, solar energy and fuel cells systems and products. With a flourishing automobile industry in China, Russia keeping their stockpile a state secret and new applications in modern technology, the prices of the precious metal often fluctuate.
The prices can also be affected by interest rates, currency markets and greater geopolitical risk. Palladium is also a dollar-dominated instrument and potential falls in the price of the currency could increase the price of the metal. 75% of palladium is mined in the United States and Russia. With the historic tension between the two nations, supply shocks are highly probable. If Russia decides to curtail its palladium export, the metal’s price is likely to rise.
Mining operations could also affect the price of palladium. Any issues hindering the mining of the metal such as worker strikes could increase the price. Additionally, if the market is overflowing with supply, miners could slow down operations to boost prices.
Gold, Silver and Palladium Prices
The prices of gold, silver and palladium sometimes move together while other times they may diverge as the price of palladium can be affected by a different set of factors.
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