Palladium Price Outlook

“It was an interesting year for palladium, with prices making fresh record highs as well as ending the year lower than where it started. Based on a year-on-year comparison, palladium was the worst performing exchange traded precious metal during 2022, with prices off 6% at the end of 2022 from the end of 2021.

While prices ran up in the first quarter of 2022 on concerns of supply disruptions out of Russia, following Russia’s invasion of Ukraine, those concerns and prices both dissipated over the course of the year, with weak fabrication demand fundamentals taking the front seat.

Weakness in auto sales was the primary culprit of weaker palladium fabrication demand. While some factors that influence auto demand are expected to improve, there are others that are expected to continue acting as headwinds. For one, the inventory crunch of 2022 in the auto sector is expected to ease in 2023 making more vehicles available for sales. This is expected to be met by slowing economic growth and higher interest rates, which are expected to dampen demand. There also is the ongoing increase in market share of electric vehicles, which is at present reducing demand for palladium at the margins.

Palladium prices are expected to move between $1,600 and $2,000 in the coming months. Seasonal strength in the precious metals sector during the first few months of the calendar year and any potential for supply disruption out of South Africa should help to provide some support to prices.

The fabrication demand side could remain a headwind to palladium prices. The increased use of platinum in gasoline catalysts and the growing market share of electric passenger vehicles are the two greatest threats to palladium fabrication demand. It would not be surprising to see the growth in importance of these factors driving palladium prices down to $1,400 or even $1,370 over the course of the year.”