Reading the Palladium Market in 2017
Palladium is the winner among precious metals over the past month, rising almost 8.0%. It’s been a good year so far for this metal. In the past week, palladium has seen its biggest one-day surge since March 2016. It’s trading at its highest level since 2001. On September 11, 2017, the price of the metal was $935.90 per ounce.
The rise in the metal is partially due to the better-than-expected August sales report for US automakers. Expectations are that areas impacted by Hurricanes Harvey and Irma could soon be replacing its flood-damaged vehicles. The metal is used in catalytic converters that curb pollution from vehicle exhausts. The growing strength in palladium can also be seen in the stock of palladium-based ETFS Physical Palladium (PALL).
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When analyzing the palladium market, it’s important to analyze the gold-palladium spread. The spread is a measurement of the number of palladium ounces it requires to buy a single ounce of gold (GLD). The greater the ratio, the weaker palladium is compared to gold.
The gold-palladium ratio was ~1.41 on September 11, 2017. The price of gold was $1,331.80 per ounce, while the price of palladium was $935.90.
The RSI (relative strength index) level for the gold-palladium spread is 56.6. When an RSI level falls below 30, there are chances of a rise in price. When an RSI level rises above 70, it indicates that the price might fall.