Palladium Price Outlook

“Palladium prices continued on their declining trend that has been in place since prices reached record high levels in March 2022, shortly after war broke out between Russia and Ukraine. Toward the end of June, palladium prices had dropped to their lowest level since January 2019. Prices could decline further in coming months alongside other precious metals as these markets move through a period of seasonal weakness and investors remain concerned about the future of demand for palladium. A decline to $1,190 or even $1,170 is possible. While prices may not fall below these levels in the near term, any meaningful increase in prices also is unlikely in the short term. Prices are likely to consolidate around $1,200 over the next few months. Prices are likely to recover some during the last quarter of this year.

For prices to break out of this range to the upside, a supply shock or the prospect of stronger demand would be necessary. There is a higher probability of a supply shock, with risk of supply disruptions from South Africa’s mining sector elevated at this time. While this concern could provide some support to prices, it is unlikely to drive prices higher unless there is an actual disruption to South African palladium mine supply. On the demand side, while vehicle sales have help up ok so far, there are concerns that slowing economic growth and rising interest rates could crimp demand going forward. Palladium fabrication demand is not only negatively affected by the concern of future vehicle demand but also by the amount of palladium being taken in by the auto industry, with the increased partial substitution of palladium with platinum in gasoline auto catalyst and the growing market share of electric vehicles, which use no palladium.”