Palladium is indeed a very small market and hence exhibits very unique and highly predictable COT patterns. When the producers begin to heavily sell after large price rallies, XPD is destined for a fall back down into its intermediate term supply/demand zone. Which in this case represents the $850-$900 range. So a nice 30%+ down swing over the course of several months can be predicted based on previous builds in the NYMEX COT report.
There is absolutely ZERO material reason for the PGMs to have staged such a large rally these last few months other then as a liquidity fueled move coupled with massive price divergence with gold. The PGM market could not have worse demand fundamentals, especially for Palladium which is mostly used for automotive use as catalytic converters in gasoline powered vehicles (ICE). With the largest customer of the metal being China who is in a secular economic slowdown, then the US/EU where vehicle prices have exploded. The market is well supplied especially as EVs take over in dominance across Asia and emerging more in western markets which require no such catalytic functions.
Market Call: We are scaling into short positions on XPD anticipating a market convergence back to its normally supplied price level of $875/oz.
There is absolutely ZERO material reason for the PGMs to have staged such a large rally these last few months other then as a liquidity fueled move coupled with massive price divergence with gold. The PGM market could not have worse demand fundamentals, especially for Palladium which is mostly used for automotive use as catalytic converters in gasoline powered vehicles (ICE). With the largest customer of the metal being China who is in a secular economic slowdown, then the US/EU where vehicle prices have exploded. The market is well supplied especially as EVs take over in dominance across Asia and emerging more in western markets which require no such catalytic functions.
Market Call: We are scaling into short positions on XPD anticipating a market convergence back to its normally supplied price level of $875/oz.
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Disclaimer
The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.