Palladium prices break down, drop $180 in technical selling - analysts
New York (Dec 4) In a sharp role reversal in the precious metals market, palladium is significantly underperforming on Thursday.
According to analysts, palladium is seeing some significant technical selling pressure. While off its lows, March palladium futures last traded at $2,306.30 an ounce, down more than $100 or 4.25% on the day.
At one point palladium prices were down more than 7% on the day, the metal’s worst correction since April 21.
“Palladium is a fairly small market so it doesn’t take much to move prices,” said Daniel Ghali, commodity strategist at TD Securities. “We think the selloff is more tactical in nature as the precious metal still has strong fundamental support.”
Charlie Nedoss, senior market strategist with LaSalle Futures Group, said that while he doesn’t follow palladium prices very closely, it looks like a break below the market’s 20-day moving average has triggered some stop-loss selling.
“The market has been trading around the 20-day for a while and it looks like that level finally broke,’ he said.
Nedoss added that palladium has been fairly range-bound through the summer with the market unable to break above resistance at $2,500. He added that investors could exiting the market in exchange for another PGM platinum, which broken to the upside and is now trading at its highest level since August.
Other analysts have said that the market could be seeing a delayed reaction to recent news from Russian nickel and palladium producer Norilsk Nickel. In an interview with Reuters Tuesday the company said that it will sell slightly less palladium than what is produced in 2020.
The company said that it sees its 2020 nickel and palladium sales down 5-7% year-on-year. Last year it sold three-million troy ounces of palladium last year.
Metal that isn’t sold this year will be stockpiled and sold in 2021, the company said.
Although palladium is seeing some technical selling pressure, many analysts aren’t expecting to see any significant shift in the marketplace.
In their 2021 outlook report released at the start of the week, analysts at Metals Focus said that they see prices pushing to $3,000 an ounce next year.
“Metals Focus believes the palladium rally will regain momentum in 2021 due to the widening physical deficit, itself almost exclusively driven by solid gains in the automotive sector,” the analysts said. “Palladium will achieve its tenth successive deficit and lead to a further fall in above-ground stocks. This in turn will help underpin the expected price upside we are calling for in 2021.
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