Palladium Market and Reading the Gold-Palladium Ratio



Palladium skyrockets

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.

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RSI level

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.

Remember, mining companies like Primero Mining (PPP), Coeur Mining (CDE), Newmont Mining (NEM), and Franco-Nevada (FNV) are all impacted by the fluctuations in these precious metals.


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