Palladium Futures Top $2,200 as US Auto Sales Lift Demand

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Palladium futures are continuing their upward trend on Thursday as rising automobile sales in the US are fueling demand for the industrial metal. Investors are also bullish on a recent forecast that suggests palladium prices will continue to rise next year. Could we see $3,000 per ounce in 2021?

December palladium futures advanced $54.70, or 2.52%, to $2,222.90 per ounce at 16:17 GMT on Thursday on the New York Mercantile Exchange. Palladium prices have slumped this week, but they have soared 23% over the last three months. Year-to-date, palladium is up more than 15%.

Platinum, the sister commodity to palladium, is also climbing on Thursday. October platinum futures jumped $16.80, or 1.76%, to $976.10 per ounce. Platinum is also down nearly 2% so far this week, but it is up 15% over the last month. So far this year, prices are up a tepid 0.45%.

In July, new motor vehicle sales surged for the third consecutive month, topping 14.5 million units. Since palladium is an integral component for automobile manufacturers to abide by government regulations regarding emissions, demand is once again growing in the post-coronavirus economy in the US and the rest of the world.

And this trend could drive palladium prices over the next 15 months, according to a new Reuters poll. With palladium primarily used in engine exhausts, the survey says palladium will average $2,050 this year and then $2,138 in 2021. This is down from previous estimates of $2,100 and $2,150 in 2020 and 2021, respectively.

family buys carIn addition to ballooning demand, there is another factor, says The mining industry’s inability to produce the metal.

With growing demand thanks to its uses in cutting car emissions, palladium is enjoying a boom, with prices rising over 100% in three years. This surge in demand, however, means that there are few well-established palladium mines. With this lacking tradition of secure palladium production, questions have been raised about the future of the metal, and the mining industry’s ability to produce it.

In other metal commodities, December gold futures rose $8.50, or 0.44%, to $1,957.50 per ounce. October silver futures rallied $0.871, or 3.35%, to $26.845 per ounce. September copper futures slumped $0.0915, or 3.16%, to $2.7995 a pound.

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