Palladium Rallying More than Gold and Silver?

Precious metals are on the rise as traders pile into safe havens amid high valuations and geopolitical risks, but the mostly industrial palladium is the standout performer. Why?

The Key Market Drivers

• Palladium has surged almost 20% so far in October, reaching two-year highs amid strong demand for precious metals amid a flight-to-safety trade.
• Palladium is used in the automotive industry for catalytic converters and is crucial for hybrids, and therefore often mirrors platinum's price.
• Amid continued uncertainty, precious metals remain bid, and with palladium lagging the other platinum group metals, it could perform better if the market trend continues.

Palladium Riding the Precious Metals Wave

Gold and silver have captured most of the headlines, as both make prices. Interestingly, the metal that has performed the best over the last month, palladium, is going under the radar. The metal's price is up 20% so far in October, competing with platinum for the top performance spot. And it's easy to confuse the two, as they are primarily used in the same application: catalytic converters. Over half of palladium consumption is for catalytic converters, making it an interesting hedge for traders as gold and silver keep rising and risk entering overbought territory.

Palladium prices hit broadly rising in conjunction with other precious metals. The reasons for the gains cited by analysts include rising trade tensions between the US and China and expectations that the Fed will cut rates through the rest of the year. Given the correlation among precious metals, palladium could continue to move in step with other platinum-group metals (PGMs). Palladium often mirrors platinum's price, as the two metals can be substituted for each other depending on market conditions.

Will Precious Metals Keep Supporting Palladium?

So far this week, the , with analysts arguing that the rally in precious metals will continue amid uncertainty around President Trump's long-term tariff policies. Those analysts note, however, that there will likely be a short-term correction in PMGs. Platinum is up more than 85% this year, and palladium has risen over 70% in the same period. Precious metals have benefited from the "debasement" trade, which is when investors lose confidence in fiat currencies like the dollar and move to hard assets. Persistent inflation above the Fed's 2.0% target rate, uncertainty about how much tariffs will raise consumer prices, and expectations of further Fed easing have exacerbated the debasement trade this year.

Commerzbank recently argued for in the current environment. Despite its recent surge, it lags the other main precious metals on a longer-term basis, which means it could play a catch-up role. Additionally, recent demand prospects have been revised upward. Palladium has underperformed over the last couple of years due to slow demand in the automotive sector. But a surprise surge in car sales in Q3 showed unexpectedly strong demand for hybrids, which rely on palladium. Commerzbank also suggested that the supply is tighter than expected.

Palladium ETF Extends Past C&H Projection

The ABRDN Physical Palladium Shares ETF (PALL), which tracks the spot price of palladium, recently broke out of a cup-and-handle pattern and slightly exceeded its measured move projection of $140 per ounce. Close to the $150 handle, further upside could take prices to 2021 levels near $170, while a break of the $130 support could expose the cup lip near $120. RSI shows a divergence, suggesting a pullback; however, the depth of the decline would depend on whether RSI resets at the 50 line or dips below it.

Source: SpreadEx | ABRDN Physical Palladium Shares ETF