Which metal is about to break out?

“Bling is in on Wall Street. Precious metals are soaring this year. Gold GC00 +0.86% keeps hitting record highs, while silver SI00 +0.68% and platinum PL00 +4.94% have done even better than the yellow metal. But there’s another hot commodity that doesn’t get as much attention from investors: palladium PA00 +2.41%.

It isn’t as if palladium has been a lousy performer this year. It is up nearly 35%. But gold has soared almost 45% while silver is up more than 50% and platinum has surged more than 55%.

Palladium’s underperformance may not last though. Mike McGlone, senior commodity strategist with Bloomberg Intelligence, wrote in a report Monday that palladium’s “steep discount to gold and platinum” could soon end and that the metal could be in “the early stages of a rising tide.”

McGlone argues that palladium, now trading above $1,200 an ounce following a 4% spike Monday, could hit $1,500 in the very near term and has the potential to head back toward its all-time peak of $3,442 from 2022 over the longer term.

“Given its significant discount to its precious-metal peers, palladium’s downside appears limited,” McGlone wrote. “Historically, commodities emerging higher from compressed ranges tend to extend to extremes.”

Palladium, like gold, silver and platinum, is used in jewelry. But its primary use case is more industrial, as part of catalytic converters in gas-powered cars and trucks. So any uptick in demand for autos should be good news for palladium.

For investors looking to gain exposure to the metal, there are some funds, including the abrdn Physical Palladium Shares ETF and Sprott Physical Platinum and Palladium Trust. There are also several publicly traded mining stocks, most notably Sibanye Stillwater, Ivanhoe Mines IVN+0.92% and Norisk Nickel.

Some challenges remain though, notably concerns of supply. In fact, strategists at BNP Paribas, said in a recent fourth-quarter outlook report that they favor platinum over palladium in the industrial precious metals arena due to “a deteriorating South African supply outlook.” South Africa is the world’s second largest platinum miner, trailing only Russia.

But just as gold, silver and platinum have benefited from the hopes for even further declines in the U.S. dollar as the Federal Reserve starts to cut interest rates, palladium could also get a boost from a weaker greenback. McGlone thinks it could even test $1,800.

So palladium has some catching up to do before it looks pricey compared with its shinier precious metal peers.”