Like platinum, palladium is also mainly used in manufacturing catalytic converters used in engines, but for gasoline-based vehicles.
So far, palladium has been stronger than the other precious metals in 2017. It has seen a YTD (year-to-date) gain of 26.5%. It seems like the preference for palladium over platinum in diesel-based car engines has driven the metal higher. It’s also used in electronics, as a chemical, and for dental applications.
The lower demand for metals and higher demand for recycled metals will likely lead to palladium demand outstripping its supply. The longer-term prospects for palladium look good based on its demand.
When we read about palladium (PALL) markets, it’s crucial to look at the gold-palladium spread, which measures the number of palladium ounces it requires to buy a single ounce of gold (IAU). The greater the ratio, the weaker palladium is compared to gold.
The gold-palladium ratio was at ~1.44 as of July 19, 2017. The price of gold was $1,242, while the price of palladium was $864.4.
The RSI (relative strength index) level for the gold-palladium spread is at 43. When an RSI level is below 30, there are chances of a rise in the price. An RSI level above 70 indicates that there might be a fall in the asset’s price.