Palladium Prices Are Going Up – Here’s Why.

 

Here’s Why Palladium Prices Are Going Up

(Bullion News Network) – Gold and silver markets saw little price action this morning but will end in the green on the day. Gold gained just over $13/oz, settling above the $2,750 resistance and placing pressure on the latest all-time high of $2,758.40/oz. Silver has stayed remarkably even since dropping on Wednesday. A major price jump Tuesday drove the metal to nearly $35/oz, a 12-year peak. The metal lost around a dollar the next day and gained only $.08 to end the week. 

The big winner this week is palladium, a platinum group metal (PGM) used in the production of catalytic converters for the automotive industry. The metal’s run began on Thursday, when the spot price of palladium jumped by nearly $100 in just one day. Friday’s price action extended the run, adding another $72 to palladium’s value. Platinum saw some similar gains earlier this week, but the gap between the two metals has grown with palladium’s latest bull run.  

Why are palladium prices going up? The main catalyst for palladium’s recent run is renewed supply concerns surrounding Russia, the world’s largest annual producer of palladium. Russia accounts for over 39% of the world’s total production of palladium. The country’s war with Ukraine has been a major market-maker for palladium prices. The initial Russian invasion of Ukraine in February 2022 drove palladium prices to an all-time high at over $3,000 per ounce. 

This week, it seems that a fresh development in the Russia-Ukraine conflict has produced another environment for the platinum-group metal to shine. 

Palladium prices jumped again today, ending the week up by more than 15 percent.

The U.S. suggested Russian palladium sanctions at a recent G-7 meeting, driving up demand for the metal as traders fear 2022-esque scarcity.

Could this be the beginning of a larger palladium run? pic.twitter.com/KZbF8LrrK0

— Hero Bullion (@HeroBullion) October 25, 2024

Geopolitics, Russia, and the Perfect Storm for a Palladium Price Run

Earlier this week, U.S. officials confirmed that North Korea has allocated some of its military forces to assist Russia in its offensive against Ukraine. In response, South Korea warned that it may provide military aid to Ukraine. Although experts say that the development has little chance to spark a regional war between North and South Korea, the introduction of new parties to the volatile conflict has stoked a renewed push for sanctions against Russia. 

The United States recently suggested that G-7 sanction Russian palladium, a proposal that experts say is unlikely to be successful, given Europe’s reliance on the precious metal. Still, the suggestion has revived fears within the automotive industry that one of the world’s core supplies of palladium may be shutting its doors. A sanction would undoubtably provide tailwinds to palladium prices, as a similar geopolitical situation drove the metal to an all-time high beyond $3,000 per troy ounce in February 2022. 

Palladium has already gained over 15% since news of potential Russian metal sanctions broke earlier this week. Because of palladium’s uses in the automotive sector, price runs are magnified by heightened demand from industry when manufacturer stockpiles begin to dwindle. Price appreciation could likely persist for several months, which is exactly what happened when sanction concerns increased in the wake of Russia’s 2022 invasion of Ukraine. 

Adding to uncertainty in the palladium market is BRICS, an alliance of countries attempting to counter the dominance of the USD and Euro using precious metals. Russia has reportedly floated the idea of a new form of bullion exchange for partner BRICS countries. While experts don’t yet know what this new system will entail, it certainly has the potential to upend American access to the vital precious metal. 

Palladium prices are now up 12.26% since the beginning of 2024.