Palladium reached its growth target after exiting the pennant in early April. Now there is a chance for a corrective downward move. Сoncerns about higher interest rates and slower economic growth continue to weigh on all commodities.
Increased metal production will put pressure on the price. Even though new volumes won't be reached until 2024, the market will start considering this scenario in advance.
Karo Platinum is getting ready to test-run its new platinum project in Zimbabwe. One of the main goals of the launch is to estimate the volume of resources at the deposit. Karo plans to start mining in 2024. Annual production of the precious metals is expected to reach 194,000 ounces. This will help Tharisa to increase its share in the platinum group metals (PGM) production market by 400,000 ounces per year.
According to WIRP, the probability of the Fed’s 25-basis-point rate hike in May is increasing. It is now estimated at about 90%, although at the beginning of last week it was 80% and the week before it was 70%. However, the market expects only one hike before the end of the year.
A pause in monetary policy tightening by the U.S. central bank is projected in June, but much will depend on incoming economic data.
The closer the Fed meeting is, the higher the bets on monetary policy tightening are. It is possible that after the meeting in May, investors will start considering a rate hike in June. In that case, metals would come under additional pressure.
According to the technical analysis, the palladium price is consolidating at the level of $1,600. The medium-term growth target after exiting the pennant was achieved. Now the wedge pattern is forming on the hourly timeframe. Considering the correction of most metals, the corrective movement should be expected, which may reach the size of the wedge. Thus, the target for the correction will be the level of $1,505. A stop-loss might be placed at the break above the wedge and the update of the local highs, which corresponds to the price of $1,647.
Palladium prices are likely to decline:
Take profit – 1,505
Stop-loss – 1,647