Away from the world of gold, the typically less-showy platinum has been having a rocking performance}}. Next, sister-metal {{8883|palladium may catch up as investors look for choice places to put money in commodities poised for bull markets.
After a standout 15% gain in November, platinum has picked up another 7% this month. If the gains stay on track, it could round the year out in the positive after an appalling first quarter and some more weakness in the early part of fall.
Palladium has hit a bump after a 19% surge between July and September. It has trended almost flat the past three months due to a mixed performance. However, if current prices hold it could finish 2020 up 23%.
Bumper Recovery In Vehicle Sales Seen Aiding PGMs
That’s not all. The so-called platinum group metals with specialized industrial functions—platinum purifies diesel-engine emissions and palladium gasoline-powered cars—could see a better 2021. This is because of the significant recovery in the global economy expected by the middle or third quarter of next year as COVID-19 vaccines are rolled out.
University of Michigan economics forecaster Daniil Manaekov, who’s been studying the potential recovery of various sectors from the pandemic, says new vehicle sales in the United States could climb to 16.3 million units by the end of 2021, up from the final estimate of 14.5 million in 2020.
In China, the largest auto manufacturing country, auto sales are expected to reach 27.227 million units in 2021 versus this year’s 22 million, according to the China Association of Automobile Manufacturers and the auto division forecasting center at Tianjin University.
Rating agency Fitch adds:
“The improving outlook for the Asia-Pacific auto sector reflects expectations that auto demand will recover by more than 10% in 2021, compared with an expected decline of nearly 20% in 2020 due to impact of the coronavirus pandemic.”
Indeed, if those global sales estimates pan out, vehicles running on gasoline, or petrol, would dominate—meaning the outlier of the demand for catalytic converters would be for palladium.
Capital.com said in an outlook published on Nov. 24:
“If we were to choose a single industrial metal whose value is most likely to rise in 2021, we would bet on palladium.”
Citing renowned forecaster Metals Focus, it said palladium could hit a new all-time high above $3,000 next year versus this year’s record high of $2,789.10, adding:
“Quite possible—in the next five years—we can see $4,000 an ounce.”
Palladium Charts More Promising Over Time
Charts courtesy of SK Dixit Charting
Chart-wise, palladium futures, which trade on New York’s COMEX, seem poised for a stronger run, according to technical models run by SK Dixit Charting in Kolkata, India. The firm’s chief forecaster Sunil Kumar Dixit adds:
“Palladium’s long term outlook is very strong with mid- and short-term going through sideways trends.”
“The metal has been trapped in a $2,196-$2,522 range the last two months. On a weekly horizon, a break above $2,380 should confirm further continuation towards $2,450-$2,500, while a move below $2,320 weakens the metal pushing to $2,300-$2,260. For now, the 50-week Exponential Moving Average is supporting platinum at $2,134.”
As for platinum, Dixit says bullish footprints on daily charts, along with firm momentum, are expected to hold prices above $1,030 an ounce.
“Trade below $1,030 may start correction lasting for a day or two, taking prices to $1,013-$1,000."
“A decisive move above $1,050 will help the metal sustain the bullishness. Stochastic RSI positivity supports the ongoing upside momentum which aims the $1,160-$1,180 areas, if $1,000 is not violated.”
That is in line with the upward trajectory for platinum forecast earlier this month by my Investing.com colleague Chris Vermeulen.
My own study of Investing.com’s Daily Technical Outlook for palladium shows a “Neutral” recommendation, though that could change to a more positive outlook as the weeks progress.
Under that outlook, there is a three-tier Fibonnaci resistance, first at $2,362. then $2,371 and $2,385.
Should the upside reverse and a bearish trend sets in, then Fibonacci support will be from $2,334 through $2,325 and $2,312.
The pivot point between the two trajectories will be $2,348.
For platinum, Investing.com’s Daily Technical Outlook is a “Strong Buy” based on its current momentum, which puts Fibonnaci resistance first at $1,061, then $1,068 and $1,079.
Under a reversal, the Fibonacci support will be from $1,038 through $1,031 and $1,020.
The pivot point will be $1,050.
As with all technical projections, we urge you to follow the calls but temper them with fundamentals—and moderation—whenever possible.
Disclaimer: Barani Krishnan uses a range of views outside his own to bring diversity to his analysis of any market. He does not own or hold a position in the commodities or securities he writes about.