Experts of Norilsk Nickel forecast the growth of the global palladium market from the lack of metal in 200 thousand ounces this year to the excess of 300 thousand ounces next year.
Norilsk Nickel accounts for 40% of global production. The metal is used in technology to absorb harmful emissions from automobile engines.
The automobile manufacturing sector is slowly recovering after the pandemic and supply chain problems of previous years. It accounts for more than 80% of palladium use. According to analysts' expectations, this will contribute to an increase in demand for metal up to 1% this year.
Previously, Norilsk Nickel analysts predicted a 300 thousand ounce shortage of the metal in the global palladium market for this year.
The forecast for a metal oversupply is compensated by an increase in demand from electric vehicle manufacturers. The long-term prospects for palladium prices may be under pressure, but the Fed's current monetary policy of pausing the cycle of rising interest rates stops the downward movement of the precious metal.
According to Patrick Harker, president of the Federal Bank of Philadelphia, the refusal to raise rates at the Fed meeting on June 14 may give the bank more time to consider future decisions on its own rates. His statement caused a sharp increase in the number of people waiting for a pause in tightening monetary policy.
Interest rate rises increase alternative costs of owning assets that do not generate income and decrease investor demand. Therefore, the new forecasts, that involve the easing of monetary policy, had a positive influence on precious metal quotes.
On the other hand, the House of Representatives has already passed a bill on the U.S. debt ceiling, forwarding it to the Senate. Even despite this, according to analysts, the prices of precious metals will be supported during the year as the global economic environment is getting worse.
The price of palladium is in a downtrend on the H4 timeframe. A pullback from the strong support at 1350.00 could be a point of trend reversal and price exit from the downtrend.
The RSI indicator (standard values) on the H1 timeframe shows a slight divergence, which gives a leading signal to change direction.
Signal:
The short-term prospects for palladium are to buy.
The target is at the level of 1415.00.
Part of the profit should be fixed near the level of 1385.00.
The stop-loss is at the level of 1330.00.
Bullish trend has a short-term character, so the volume of trade should not exceed 2% of your balance.
This content is for informational purposes only and is not intended to be investing advice.
