Palladium Erases Most of Intraday Rally, Still Poised to Settle Session Higher

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Palladium futures skyrocketed as much as 4% on Thursday, but the broader financial market decline pared the industrial metal’s rally. Palladium prices had found support in the increase in South Africa’s coronavirus cases, but they were not enough to withstand the steep drop in the US stock market. Is the global economic recovery on hold, or are investors taking more of a wait-and-see approach?

September palladium futures rose $8.50, or 0.44%, to $1,946.80 per ounce at 16:39 GMT on Thursday on the New York Mercantile Exchange. Palladium prices had spiked more than 4%, topping $2,000 in intraday trading. Since then, the industrial metal has erased nearly all its gains. That said, palladium is on track for a weekly gain of about 2%, lifting its year-to-date jump to nearly 3%.

Platinum, the sister commodity to palladium, is joining the broader market slump. September platinum futures plummeted $40.50, or 4.58%, to $843.50 per ounce. Platinum prices are still poised for a 2% weekly boost, but they are down more than 13% so far this year.

While palladium has yet to hit its peak of $2,711 in February, the metal commodity has recovered since it cratered to $1,300 at the height of the market meltdown in March.

There have been several factors driving palladium’s ascent. The first is the stability in financial markets after governments and central banks extended fiscal and monetary relief and stimulus. The second is the general optimism that the global economy would recover in the aftermath of the COVID-19 public health crisis. The third is that with demand rebounding producers would not be able to keep up due to coronavirus-related restrictions and guidelines.

When South Africa was under lockdown, the decision elevated palladium prices. With the number of confirmed COVID-19 cases dramatically rising in South Africa and a growing number of miners being infected with the virus, there is speculation that the country could return to a shutdown. The nation has more than 225,000 confirmed coronavirus cases, with a death toll of 3,600.

Asian markets are reporting a recovery, too. In China, the latest manufacturing and non-manufacturing purchasing managers’ index (PMI) readings have rebounded to expansion, helping the metals market add to its gains.

In other metal commodities, August gold futures tumbled $16.90, or 0.92%, to $1,803.70 per ounce. September silver futures slumped $0.221, or 1.15%, to $18.94 an ounce. September copper futures picked up $0.0125, or 0.44%, to $2.8365 per pound.

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