Related: The Diversification Benefits of Gold ETFs to Mitigate Short-Term Risks

Moreover, the U.S. is seeing shifting preferences with a greater number of consumers turning to gasoline vehicles and away from diesel, which accounts for the rise in palladium demand relative to platinum demand.

“While there is likely to be a pickup in platinum demand from heavy-diesel trucks, it won’t be enough to counter the decline in demand from light vehicles,” Gold said.

On the supply side, production could limit pullbacks in the palladium market. About 40% of palladium mine supply comes from South Africa, which has experienced a number of pay-related disruptions, and another 40% from Russia. The Russian government had been selling its stockpiles but there has not been any from this source since 2013.

Consequently, Johnson Matthey, a manufacturer of catalysts for emissions controls, projects palladium demand to outpace supply in 2017, the 6th consecutive year of supply deficits.

For more articles on precious metals ETFs, visit etftrends.com/precious-metals.

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