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Palladium: Worst Performing Commodity
in 2021, but is Poised for rebound in 2022

Palladium price has recorded one of the highest declines among commodities in 2021. The prospects for 2022 appears positive for the precious metal, notes Faith Maina, trader and financial analyst for

Key Drivers

At the beginning of May, palladium price surged close to the $3,000 level. However, it has since dropped by about 34.33%. During that timeframe, other precious metals like silver and palladium have dropped by 14.58% and 22.96% respectively. Indeed, it has been one of the worst-performing commodities in 2021. However, based on both the fundamentals and technicals, it is due for a rebound in the coming year.

In the current year, palladium price has been under pressure following the global chip shortage and the increased use of the cheaper platinum in catalytic converters. According to Metals Focus’ managing director, Nikos Kavalis, the easing of supply chain challenges and heightened purchases by China are expected to boost the precious metal in the new year.

The analyst has stated, “We expect a big rebound in demand, which should also be augmented by stock replenishment in China…The market will move back into deficit in the second half of next year, driving prices up.” Notably, Morgan Stanley in its December report that a revival in auto production from second half of 2022 would also boost the demand for palladium. MS expects palladium price to average at $2,100 per ounce in 2022.

Even with these bullish expectations, data from the Commodity Futures Trading Commission shows that net-short positions by various hedge funds are the most bearish since 2009. Automobile electrification and platinum substitution will be the key headwinds in the coming months.

Palladium Price Prediction

Palladium price has pulled back after rallying past a crucial level in the previous session. The precious metal will close 2021 close to the $1,900 level.

In the immediate term, I expect palladium price to find resistance along the week’s high at 2,015.92. As such, it will likely trade within a rather tight range with the 25-day EMA at 1,920.68 as the support level.

Additional bullish momentum will likely give the bulls an opportunity to break the aforementioned resistance and push the price higher to the next target at 2,101.02. On the flip side, a pullback past the indicated support level will likely have the metal decline to the 50-day EMA at 1,865.98.

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