Palladium futures slipped below $2,400 on Thursday, despite a recovering automobile sector. But market analysts are still bullish over the industrial metal that is critical to the vehicle manufacturers. Although palladium prices are on track for their fifth consecutive annual gain, the uncertainty over the near-term direction of the US dollar could impact their end-of-year performance.
December palladium futures tumbled $34.90, or 1.44% to $2,392.60 per ounce at 19:18 GMT on Thursday on the New York Mercantile Exchange. Palladium is on track for a weekly boost of more than 1%, adding to its year-to-date surge of 25%.
Platinum, the sister commodity to palladium, also traded in the red toward the end of the trading week. January platinum futures fell $7.70, or 0.86%, to $886.20 an ounce. Platinum is still poised for a 2% weekly jump, but it remains down nearly 9% so far this year.
A new Reuters poll found that most analysts and traders expect palladium to average $2,188 per ounce this year and $2,317 next year. The survey alluded to supply shortages and a recovering automobile sector for the higher prices.
Palladium had touched a record high in February, topping $2,875 an ounce. It fell to around $1,500 at the height of the coronavirus pandemic before resuscitating in the fallout of the market meltdown.
Platinum, meanwhile, is forecast to average $876 in 2020 and $950 next year. The platinum and palladium markets could slip into a deficit, which explains why forecasters are penciling in a pop in prices over the next 15 months.
In March, platinum cratered to an 18-year low of $558 amid the coronavirus-induced financial crisis.
Palladium is a crucial element in the automobile sector because it is utilized in car exhaust systems to neutralize harmful emissions. Since carmakers are mandated by law to adhere to government-imposed standards, these companies depend on palladium. Platinum is used in auto manufacturing, but it is also consumed as jewelry and investment.
In July, the newswire’s poll found that analysts and traders expected $2,050 for palladium this year and $832 for platinum.
In other metal commodities, December gold futures shed $24.50, or 1.27%, to 1,905 an ounce. November silver futures plunged $0.491, or 1.95%, to $24.75 per ounce. December copper futures declined $0.045, or 1.41%, to $3.1535 a pound.
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