Palladium Settles Lower Despite 2021 Global Deficit Forecast

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Palladium futures continued their subdued trading pattern on Tuesday, despite a noteworthy rally in the broader financial markets. As the global economic recovery continues, palladium prices are widely anticipated to test all-time highs in 2021. Is $3,000 or even $4,000 on the horizon?

December palladium futures slipped $3.40, or 0.14%, to $2,350.40 per oucne at 19:53 GMT on Tuesday on the New York Mercantile Exchange. The industrial metal has slumped nearly 1% this month, but it is still up close to 23% year-to-date.

Platinum, the sister commodity to palladium, is heading in the opposite direction. January palladium futures surged $32.60, or 3.50%, to $964.30 an ounce. Although platinum is down about 0.8% so far this year, it has rallied 11% in November.

So, what is the deal with palladium?

A new projection by Metals Forecast suggests that palladium pries could soar to an all-time high of $3,000 per ounce in 2021. Over the next five years, palladium could spike to as much as $4,000 per ounce.

Indeed, there are several factors driving the palladium boom.

One of them is a weaker US dollar, which has plunged more than 4% in 2020. A lower buck is good for dollar-denominated commodities because it makes it cheaper for foreign investors to purchase.

Another aspect is the continuing shortage in the global palladium parket amid the coronavirus pandemic. Norilsk Nickel is predicting a new deficit in the first quarter in 2021, mainly because South Africa, which accounts for 90% of global output, is having a hard time restarting operations and approving new mines.

China is one of the few major economies to recover in the aftermath of the public health crisis. It is poised to post an annual gain, despite being ground zero for the coronavirus. With a recovering economy, Chinese customers are fueling automobile sales. Since the nation is maintaining new vehicle emission standards, it has become the second-largest consumers of palladium.

Palladium is trading at multi-year highs, but it still has room for growth unless carmakers switch to platinum to curtail emissions and adhere to government mandates.

In other metal markets, December gold futures plunged $33.50, or 1.822%, to $1,804.30 an ounce. January silver futures fell $0.383, or 1.62%, to $23.25 an ounce. January copper futures picked up $0.044, or 1.35%, to $3.302 a pound.

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