Unlike gold, palladium enjoys heavy industrial demand, notably in the automobile industry, which may also help bolster palladium prices as we head toward the end of the business cycle.
“Given palladium’s demand is most sensitive to the industrial production cycle, palladium may see further support along with industrial metals in anticipation of a rise in US infrastructure spending and recovery in global growth.”
Meanwhile, palladium is also seeing supportive supply dynamics.
“Global palladium supply deficits have persisted since 2012, making palladium’s fundamentals very supportive for prices,” Gold said. “Deficits are expected to persist for 2017 and beyond with forecasts from Johnson Matthey of a 651,000-ounce deficit in 2016; this should add further support to palladium. Expected continued supply deficits, growing demand, and drawdowns in above-ground stocks have kept the market balance for palladium favorable.”
For more information on the palladium market, visit our palladium category.