Palladium has this morning set a new all-time price record of $1,701.50 per ounce, following two weeks of continual price records.
The metal set a new record of $1,627.53 on Thursday September 19, then set a new record of $1,636.60 just a day later. A weekend surge saw palladium hit $1,664.50 last Monday, and again the price has jolted higher today.
Trade optimism, generated by the public promise of trade talks between the US and China, has helped stock markets and lessened investor concerns, reviving interest in palladium and other precious metals used for industrial purposes.
Optimism isn’t the only factor driving the price rise, however. Unrest in South Africa – disrupting labour – is threatening what is an already limited output. Palladium hasn’t met demand for years, and any disruption could limit the already insufficient supply further. The militant union Amcu recently re-elected Joseph Mathunjwa as its leader; a man who has previously been labelled a ‘firebrand’ for his combative approach to negotiations. Some fear that Mathunjwa’s election could see incidents repeating the clashes of 2012, which left 34 dead after skirmishes between the workers on strike and the South African police.
According to Statista, Russia produced 85 tonnes of palladium in 2018, but South Africa was not too far behind in second place with 68 tonnes – a large chunk of the global supply. Canada, the US, and Zimbabwe each produced between 12-17 tonnes of the precious metal.
How high can palladium go?
Expert insight on palladium’s potential is split between two camps. The first group believe that there’s a mix of solid demand for palladium, as well as current market optimism. These, added to the limited supply, are driving prices higher. The correlation of gains in comparison to gold is obvious, and liquidity could be a favourable benefit to picking up palladium.
The second group of experts believe that palladium is enjoying the perfect scenario, and this will be a brief peak – albeit a high marker. The forecast from this camp is that the US/China trade war keeps speaking of progress and then not actually making any; all while the global economy continues to slow down. Precious metals refiners Heraeus issued a similar warning in their latest Precious Metal Appraisal newsletter, in which they argued that the demand for palladium from the automotive industry will keep prices high, but the threat of recession risks a slump in demand, which will in turn drop prices.