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Palladium has been outperforming other precious metals by a healthy margin this year and is expected to continue this trend. It has become more valuable than gold, indicating its strength driven by rising demand and limited supply. Palladium is currently trading above $1,900 per ounce, while gold is hovering near $1,660 per ounce.
Ongoing supply issues are driving palladium prices higher. Sanctions on Russia that limited supply, and Russia’s retaliation in response are bolstering prices. The financial sanctions on Russia have worsened an already tight supply. Notably, about 45% of global palladium reserves are in Russia. Additionally, palladium's mine supply is looking subdued, with most of the large palladium miners publishing downbeat production guidance for 2022. As such, the metal market is likely to move back into a deficit, per the autocatalyst maker Johnson Matthey.
While supply remains limited, demand has been strong owing to increased demand from China and other countries where the economy is growing. Palladium is used to make catalytic converters in gasoline automobiles that reduce emissions. As automotive production is rebounding this year, palladium autocatalyst demand is set to increase. However, the central bank’s desire to tame inflation may lead to a global slowdown and thus could hurt demand.
If these aren’t enough, safe-haven demand due to heightened volatility and uncertainty and global recession fears is also facilitating the rally in this precious metal. Commodities are often viewed as an inflation-protected asset.
U.S. consumer prices increased more than expected in September, indicating persistent and elevated inflation, which is squeezing household spending and pushing the Federal Reserve toward another aggressive rate hike. The core consumer price index, which strips out volatile components, such as food and energy prices, climbed 6.6% year over year, marking the biggest annual increase in 40 years (read: 5 Sector ETFs to Win from September Inflation Data).
Coming to technical analysis, the metal has room to climb further as prices are heading toward a so-called "golden cross” (when a short-term moving price average crosses above a longer-term moving average).
PALL in Focus
abrdn Physical Palladium Shares ETF seeks to match the price of palladium. It owns palladium bullion in plates or ingots kept in Zurich or London under the custody of JPMorgan Chase Bank.
Aberdeen Standard Physical Palladium Shares ETF has amassed $324.4 million in its asset base and trades in a lower volume of about 19,000 shares a day. It charges 60 bps in annual fees and has a Zacks ETF Rank #3 (Hold) with a High risk outlook.
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Palladium ETF Outshining Gold
Palladium has been outperforming other precious metals by a healthy margin this year and is expected to continue this trend. It has become more valuable than gold, indicating its strength driven by rising demand and limited supply. Palladium is currently trading above $1,900 per ounce, while gold is hovering near $1,660 per ounce.
As such, abrdn Physical Palladium Shares ETF (PALL - Free Report) is up 1.8% so far this year, while SPDR Gold Shares (GLD - Free Report) and iShares Silver Trust (SLV - Free Report) have declined 10% and 17%, respectively. abrdn Physical Platinum Shares ETF (PPLT - Free Report) is down 5.1% (read: More Pain Ahead for Markets? Defensive ETFs to Play).
Ongoing supply issues are driving palladium prices higher. Sanctions on Russia that limited supply, and Russia’s retaliation in response are bolstering prices. The financial sanctions on Russia have worsened an already tight supply. Notably, about 45% of global palladium reserves are in Russia. Additionally, palladium's mine supply is looking subdued, with most of the large palladium miners publishing downbeat production guidance for 2022. As such, the metal market is likely to move back into a deficit, per the autocatalyst maker Johnson Matthey.
While supply remains limited, demand has been strong owing to increased demand from China and other countries where the economy is growing. Palladium is used to make catalytic converters in gasoline automobiles that reduce emissions. As automotive production is rebounding this year, palladium autocatalyst demand is set to increase. However, the central bank’s desire to tame inflation may lead to a global slowdown and thus could hurt demand.
If these aren’t enough, safe-haven demand due to heightened volatility and uncertainty and global recession fears is also facilitating the rally in this precious metal. Commodities are often viewed as an inflation-protected asset.
U.S. consumer prices increased more than expected in September, indicating persistent and elevated inflation, which is squeezing household spending and pushing the Federal Reserve toward another aggressive rate hike. The core consumer price index, which strips out volatile components, such as food and energy prices, climbed 6.6% year over year, marking the biggest annual increase in 40 years (read: 5 Sector ETFs to Win from September Inflation Data).
Coming to technical analysis, the metal has room to climb further as prices are heading toward a so-called "golden cross” (when a short-term moving price average crosses above a longer-term moving average).
PALL in Focus
abrdn Physical Palladium Shares ETF seeks to match the price of palladium. It owns palladium bullion in plates or ingots kept in Zurich or London under the custody of JPMorgan Chase Bank.
Aberdeen Standard Physical Palladium Shares ETF has amassed $324.4 million in its asset base and trades in a lower volume of about 19,000 shares a day. It charges 60 bps in annual fees and has a Zacks ETF Rank #3 (Hold) with a High risk outlook.