A look at palladium
Palladium has fallen the most among the four precious metals on a YTD (year-to-date) basis. It has fallen 9.6% YTD and was trading at $977 on March 26, 2018. Palladium is famous more as an industrial metal than as a precious metal due to its heavy industrial uses. Palladium is also used as a catalyst in diesel-based engines. The demand for diesel-fueled vehicles has risen over gasoline-fueled cars, which gave some fundamental support to the metal during 2017. Palladium could have also rallied due to its ongoing supply deficit.
The comparative performance of palladium against gold can be measured with the gold-palladium ratio. The ratio measures the number of palladium ounces you need to buy a single ounce of gold. The gold-palladium spread is 1.38. A spread of 1.38 indicates that it requires almost 1.4 ounces of palladium (PALL) to buy a single ounce of gold. The ratio had a steep fall in 2017 as palladium approached par with gold (GLD).
The RSI (relative strength index) level for the gold-palladium spread was 58.8 on March 26.
Mining companies also closely react to changes in precious metals. The mining companies that have seen an uptrend in prices over the past week include Kinross Gold (KGC), Iamgold (IAG), Buenaventura Mining (BVN), and New Gold (NGD).
In the next part of this series, we’ll look at the gold-platinum cross rate.