Will Palladium Outshine Gold in 2013
???? Today’s Spotlight Market
From 2011 to 2012, investment demand for Palladium rose by over 1 million ounces, with strong investor interest in physical Palladium exchange traded funds (ETF’s) a key component in this rise.
The steep sell-off in Gold prices this year in addition to rising equity prices has taken some investor interest away from precious metals, but potentially supportive fundamentals may peak traders’ interests once again, should prices regain levels seen earlier this year.
???? Fundamentals
The precious metals sector has been shunned by many investors this year, with the historic fall in Gold prices capturing all the headlines. However, supportive fundamentals in the Platinum metals group (PMG) may start to peak traders’ interests.
Palladium has been the best performer of late, with a forecast by metals processor Johnson Matthey calling for supplies of this precious and industrial metal to remain tight this year, after falling into a 1.07 million ounce deficit in 2012. Palladium supplies have fallen to 6.55 million ounces, which is the lowest supply level in 11 years.
Demand rose by 16% last year, as its use in catalytic converters for gasoline powered automobiles increased due to higher production in Asia. Russian sales of Palladium from state-held reserves continue to fall, with only 250,000 ounces brought to market.
The wild card this year may come from South Africa, where potential labor issues may shut mines possibly affecting the production of Palladium, Platinum, and Gold. Should labor issues curtail Palladium production for any length of time, we could see potential upward price pressure in the coming months, especially if demand continues to hold at expected levels.
???? Technical Notes
Looking at the daily chart for June Palladium, we notice prices rebounding to the 61.8% Fibonacci retracement level from the March highs to the April lows.
Prices are now well above both the 20 and 200-day moving averages (MA), and momentum as measured by the 14-day RSI has tuned stronger, with a current reading of 58.83. The next resistance level is seen at 750.00, with support seen at the 20-day MA, currently near the 690.50 price level.
——————————————————————————————–
Disclaimers
This article is provided for informational purposes only. No statement in this article should be construed as a recommendation to buy or sell a security or to provide investment advice. The content provided has been obtained from sources deemed reliable but is not guaranteed as to accuracy and completeness. optionsXpress makes every effort to provide timely information to its recipients but cannot guarantee specific delivery times due to factors beyond our control.
Derivatives involve substantial risk and are not appropriate for all investors. Please read the “”Disclosure Statement for Futures and Options”” prior to investing in futures or options.
For investments using a straddle or strangle options strategy the potential loss is unlimited. Multi-leg option strategies are subject to multiple commissions. Profits may be eroded by the commission expended to open and close the positions and other risks apply.