The past couple of months have been extremely well for commodities, with Palladium, in particular, breaking multiple records over the past few weeks. Today, palladium prices surged to record highs as ongoing supply shortages continue. Currently, prices for the silvery-precious metal are sitting at $1,577 per ounce, up 0.8 percent as it seems increasingly clear that the commodity will breach the $1,600 price range soon.
“There is big demand and the exchanges have no material,” added George Gero, managing director at RBC Wealth Management. “The industry does not use bars and so the mines make grains, which are not deliverable.” Overall, prices for palladium have increased over 24 percent in 2019 as automakers need the commodity for catalytic converters for electric vehicles. At the same time, a fair bit of this price surge has come from speculative interest. This has led to a few analysts worrying that palladium prices could become a bubble, shooting up as high as the $2,000 mark before plunging back down.
“The palladium market continues to show very consistent bullish action on the charts with a five-day pattern of higher highs and higher-lows,” said analysts at Zaner Precious Metals in a note. “An issue that might lend some support to the [platinum group metals] complex this week, are indications that South African power cuts are expected to continue as the primary power generating company remains in a state of chaos.” At the same time, hey went on to speak about gold prices, saying that “we are somewhat suspicious of the recent gains in gold as global political uncertainty seems to be moderating and economic data seems to be more deflationary than anxiety-ridden.”
Gold prices ended Monday on a loss, giving up some of the modest gains made earlier as most wait to see the result of the Federal Reserve’s meeting that’s coming this week. The Fed’s rate-setting committee is finishing a two-day meeting on Wednesday, with investors around the world watching closely on any new policy statements. At the moment, most expect the Fed to keep the same stance it adopted in January, putting its rate-hiking plan on pause as it took a wait-and-see approach.
Other major meetings with central banks are taking place throughout the week. The Bank of England and the Swiss National Bank are due to meet this Thursday. Russia, which was the world’s top gold buyer in 2018, will be meeting other banks on Friday.
Overall, the World Gold Council reported that central banks were buying gold in record quantities, with the net increase in 2018 sitting at 651.5 metric tonnes as opposed to the 375 tonnes purchase in 2017. Much of this was driven by Russia but growing geopolitical concerns – including the ongoing trade tensions between Washington and Beijing – are playing a role in both last years’ as well as current years’ gold purchases.
Other precious metals have been steadily rising as well. Silver increased by 0.7 percent to $15.38 an ounce, while palladium’s sister metal platinum increased by 1 percent to $836.25. Other in-demand commodities such as copper ended the day inching up 0.12 percent as well.