Palladium price nears gold price with new record-high
London (Nov 19) Palladium is closing in on parity with gold after hitting an all-time record value of £923.23 per ounce in the early hours of this morning as a supply deficit and speculation that the Chinese automobile industry will act drove demand up sharply either side of the weekend.
Gold is currently £950 per ounce, while palladium is slightly down from this morning’s peak at £918.16 per ounce; a 3.36% difference in value compared to what usually would be 21.4%. The last time gold and palladium were equals was October 2002, with palladium prices crossing paths with gold as they came down from a recent peak.
Palladium price, per ounce, in GBP for the past three years.
The changes, detailed below, are a remarkable rise in the fortunes of palladium and a sign that it is likely to be the best performing precious metal for 2018.
•£56.16 per ounce (6.51%) in the past week
•£89.89 (10%) in the past month
•£202.25 (28.23%) in the past 3 months
•£553.88 (153.25%) in the past 3 years
Market analysts are attributing the rapid pursuit of palladium as a combination of the supply deficit (239,000 ounces according to Johnson Matthey) but also the bandwagon effect, with experts suggesting investors like to buy assets that are on the up. Citigroup is predicting “extreme tightness” for the next six months, with a price estimation of $1,300 per ounce of palladium (£1,010.31) by the end of June 2019.
Some of the investor demand is believed to be from China as a pre-emptive move before the US can implement further tariffs as part of the ongoing trade war between the two nations, and there is additional speculation that China will be providing a stimulus to the car industry – in order to energise a flat market and continue with its cleaner air initiatives across the country – though the shared disappointing industry figures from the UK and the US suggest that maybe such a problem isn’t entirely China’s fault nor is it going to be resolved with domestic policy. Palladium’s performance does hinge heavily on the performance of the automotive industry however, with 80% of total demand coming from this industry.
Palladium is used in catalytic converters for vehicles in order to reduce emissions, being favoured in petrol-based engines. Platinum, the traditional rival, is current seen as quite cheap compared to the recent historical averages and some investors and market analysts are expecting a switch from one metal to the other as palladium grows in value but given the limited substitution capacity for the two metals there’s not currently much appetite for platinum investment.
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