Palladium Pares Gains After Topping $2,000

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Palladium futures are settling lower on Tuesday after topping $2,000 earlier in the trading session. The industrial metal has been on a roller coaster ride in the first half of 2020, hitting an all-time high and then wiping out its monumental gains. Palladium prices have since recovered, and now analysts are split if they can reach previous forecasts of about $3,000 or be fortunate enough to trade at around $2,000.

September palladium futures tumbled $14.80, or 0.74%, to $1,973.60 per ounce at 19:16 GMT on Tuesday on the New York Mercantile Exchange. Palladium had touched $2,025 in the morning part of the trading session before paring its gains. Despite plummeting 20% over the last three months, prices are still up more than 3% year-to-date.

Although palladium is still trading 30% below its record high from February, it is beginning to show signs of recovery. Some experts contend that the metal is still far from being a bargain, riding the momentum from the broader market over reopening economies around the world.

Ed Egilinsky, head of alternatives at Direxion, told MarketWatch that rising demand may not be enough to elevate prices to what analysts had projected earlier this year. Some forecasts anticipated palladium to surge to $3,000 by the end of 2020, but Egilinsky argues that automobile sales need to spike in North America and China, mining operations in Russia and South Africa need to endure supply disruptions, and a COVID-19 vaccine needs to be developed.

One thing not in palladium’s favor is that its supply deficit is expected to dwindle this year. According to a Metals Focus report, the industrial metal could face a shortfall of 124,000 ounces, which is close to a balance in global markets.

Overall, if local outbreaks of the coronavirus persist, global supply chains will continue to be impacted. This means that it could be difficult for palladium to sustain its level at about $2,000.

In other metal commodities, July gold futures fell $14.10, or 0.8%, to $1,736.20 per ounce. August silver futures plummeted $0.49, or 2.61%, to $18.335 an ounce. July copper futures picked up $0.018, or 0.73%, to $2.4885 per ounce. July platinum futures dropped $30.70, or 3.41%, to $870.40 an ounce.

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