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Palladium Was the Worst Performer at End of December


Jan. 4 2016, Updated 11:11 a.m. ET

Worst performer

Palladium takes the title for worst-performing precious metal in 2015. The carnage in the commodities sector has not spared the precious metals sector. Not even palladium saw strong demand. Palladium lost around 30% in 2015 to hit a low of $525 per ounce. However, palladium saw a major recovery during the Volkswagen scandal where consumers expected demand for gasoline-based cars to see a boost. Palladium futures for March 2016 expiry are trading at $549 per ounce.

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Technical analysis

The RSI (relative strength index) for palladium is trading close to the RSI levels for gold and silver. The 43 level is close to the 30 level, which signifies undervaluation. The figure is down from 50, which was seen during the December Federal Reserve policy meeting. Palladium futures are trading at a 9.5% discount from their 100-day moving average price of $606. The current price is also trading at a 6% discount from the 50-day moving average price of $584. The open interest in palladium for the call options is higher than that of the put options. This is another indicator that may suggest a possible pullback in palladium prices.

The fall in palladium prices has left palladium ETFs like the Physical Palladium Shares (PALL) depressed as well as other precious metals ETFs like the SPDR S&P Metal and Mining ETF (XME). The worst-performing mining companies in December include Cia De Minas Buenaventura (BVN), Yamana Gold (AUY), and Aurico Gold (AUQ). These three companies fell 11.2%, 11%, and 18.1%, respectively. Together these three companies make up 8.3% of the price changes in the VanEck Vectors Gold Miners ETF (GDX).


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