(Bloomberg) — Palladium is headed for its seventh monthly increase after the year’s best-performing commodity resumed a breakneck rally that’s driven prices into uncharted territory.
The metal is up almost 83 percent since mid-August, spurred on by a shortage of near-term supply as car manufacturers seek to meet ever-stricter emissions standards. The scramble for supply has continued despite a slowdown in global car sales, the sector which accounts for the largest portion of palladium demand.
traded 1.2 percent higher at $1,548.94 an ounce by 11:51 a.m. in London, after dropping 2.1 percent yesterday. The latest record of $1,567.44 was reached earlier this week.
“Most of the economic news is gloomy and January car sales weren’t good, yet palladium keeps on rising,” said Matthew Turner, precious metals analyst at Macquarie Group Ltd. “The possibility of substituting for platinum seems less likely as manufacturers have moved their research and development onto electric cars and these factors have outweighed slowing car sales.”
Outflows from palladium-backed exchange traded funds have slowed in recent weeks, with holdings having sunk to the lowest in 10 years as inventories were used to cover the supply deficit. This slowing could be a sign that there is little remaining stock to meet existing demand, said Turner.
He sees the price continuing to rise in the near-term. However, the metal’s close relationship with platinum will eventually force the two precious metals to trade closer to parity in the longer-term, Turner said.
In other precious metals, gained 0.5 percent on Thursday to about $1,326 an ounce to head for a fifth monthly gain. The metal reversed earlier declines after talks between the U.S. and North Korea broke down.
has benefited from palladium’s great run, belatedly catching its wave to gain 6.5 percent in February, the best month since January 2018. remains the only precious metal to register a decline this month.
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