Before you open a position in the commodity, you could have a clear palladium trading strategy in place. There are several different approaches you can take in designing your trading plan. A CFD is a type of contract between a trader and a broker that aims to potentially profit from the price difference between opening and closing the trade.
With three-quarters of the global supply of palladium coming from two countries, there is a real possibility for supply shocks in palladium production. Investing in the commodity is a way to bet on surging demand for automobiles in emerging market countries such as China and India. Below is a list of some of the palladium stocks you can trade on with our platform.
Fundamentally palladium looks to be in an excellent position, with automotive demand continuing to grow, supplies of the metal constrained, and investment interest in the market growing. Buying on breakouts of dips will allow traders to capture most of the upside potential in palladium. Increasing demand from China and India will help prices, but because supplies of palladium are also limited the metal faces a strong uptrend that could last for years to come. The best palladium trading strategy will depend on your risk tolerance, portfolio size and goals, and whether you want to focus on short-term or long-term price action. Traders use technical analysis tools to identify whether the market is in an upward trend – reaching higher highs and higher lows – or a downward trend – reaching lower lows and lower highs. If the palladium price is in an upward trend you can take a long position until indicators point to a change in the trend.
Learn more about palladium trading – from how the market works and what drives the prices, to different types of instruments and trading strategies. There are many publicly traded companies that have some exposure to palladium prices. An options bet succeeds only if the price of palladium futures rises above the strike price by an amount greater than the premium paid for the contract.
Price action trading looks for patterns in price movements to predict the future direction of the market. If recent price action indicates the palladium price could rise, you can open a long position. On the contrary, if it indicates the price could fall, you can take a short position. Palladium producers also mine and refine other metals, so this can diversify your holdings but increase your exposure to those other markets.
You can keep up to date with the palladium and precious metal industry news with our news and insights section, which contains fundamental analysis reports from Morningstar and news updates from Reuters. In summary, palladium has experienced an increase in demand over the years, resulting in a growth in popularity among many investors. We offer a number of stocks and ETFs, as well as the physical palladium commodity, to spread bet and trade CFDs on through our web-based trading platform, Next Generation. Established in 2013, A-Mark Precious Metals is a company involved in the trading of precious metals.
Lawrence Pines is a Princeton University graduate with more than 25 years of experience as an equity and foreign exchange options trader for multinational banks and proprietary trading groups. In 2011, Mr. Pines started his own consulting firm through which he advises law firms and investment professionals on issues related to trading, and derivatives. Lawrence has served as an expert witness in a number of high profile trials in US Federal and international courts. CFDs allow traders to speculate on the price of palladium without owning the asset. Futures are a derivative instrument through which investors make leveraged bets on commodity prices. Similarly, the low-interest-rate environment in the United States and Europe should bode well for the automobile industry.
If the price is in a downward trend you can go short until the trend turns upward. A news trading strategy focuses on buying and selling an asset in response to news such as the release of economic data, government policy announcements and geopolitical events. Using a news trading strategy, a trader would have bought palladium at the start of the Russian invasion of Ukraine and sold when the price subsequently rallied amid concerns about the impact on supply. Futures contracts enable you to speculate on the price of palladium whether you expect it to rise or fall. You can cash settle a futures contract before it expires by rolling forward into another futures contract or exchange it for a spot trade.
The Precious Metal Index allows traders to have increased exposure in palladium as well as other metals without placing complete reliance in one commodity. However, it is important to be aware of the fact that other precious metals, such as gold, can be rather volatile assets in the short-term, which may have a subsequent effect on the basket’s value. The price of palladium was rising strongly from 2016 to 2019, and many traders took advantage of that trend in which palladium tripled in price. A correction was forced by the rise of the coronavirus pandemic, but palladium could be the first metal to recover as supplies of the grey metal have lagged demand for nearly a decade. That could give traders another excellent opportunity in this most rare of precious metals.
Price action strategy
These stocks can be traded on through spread bets and CFDs on our Next Generation trading platform. It is used in the production of many industrial and electronic products and is a much rarer material than other precious metals, such as gold. A member of the platinum group metals, palladium has seen a great increase in demand over the years, subsequently increasing its attractiveness to investors. Spread bets and CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 77% of retail investor accounts lose money when spread betting and/or trading CFDs with this provider. You should consider whether you understand how spread bets and CFDs work and whether you can afford to take the high risk of losing your money.
Palladium is one of the most valuable precious metals, along with gold, silver, and platinum. View our palladium price chart in order to find more details about margin rates, holding costs and trading hours. Our Precious Metal Index enables you to trade on palladium, as well as a number of other precious metals, through a basket of commodities. This product tracks the underlying prices of the commodities, all in one single position.
What Influences the Price of Palladium
Palladium makes up 15% of the index, and its price action would have an effect on the overall value of the index. If palladium’s price rises, then the overall value of the index may increase, and vice-versa. Traders who like gold and silver because they are both rare and valuable will really appreciate palladium as it is one of the rarest metals on Earth. Palladium is over 30 times rarer than gold, and in addition to its role as a precious metal it also serves as an industrial metal, with some 60% of all palladium being used in the automotive industry. That connection actually makes it easier to trade palladium since its price often follows trends within the auto industry, rising when car sales are hot, and falling when the auto makers are struggling. Examples of palladium stocks include multinational precious metals companies such as A-Mark Precious Metals, Sibanye Stillwater Ltd and Ivanhoe Mines Ltd.
Since the 1930s, palladium has been used in pieces of jewellery as an alternative to the precious metal, platinum. The general political and economic state can always affect the different markets, however, the fact that only two countries are the main suppliers brings even more risks. A change that will affect one of them, especially Russia, can cause an upheaval in the palladium market. It is important to remember that often metals are linked to one another, so a dramatic change of palladium price might also result in other metals’ prices changing. As more ETFs feature precious metals, this could see the demand of palladium grow as the silver and gold markets become crowded. Sentiment on the wider commodities markets is a key driver for palladium as one of the precious metals that investors could use to diversify and hedge their portfolios.
The behaviour of the dollar is also an influential factor affecting the demand for palladium. For example, if the dollar depreciates in value against the Russian Ruble, for Russian palladium producers receiving revenue in US dollars, profit margins may take a hit. Consequently, this would act as an incentive to decrease the supply of palladium to the global market, thus increasing the price for the precious metal.
Should Russia curtail its exports of palladium, the price of the metal could soar. Get tight spreads, no hidden fees, access to 12,000 instruments and more. In contrast, palladium consumption in electronics has been declining, as palladium has been substituted by nickel in multi-layer ceramic capacitors , which are used in power supply circuits. China is the top consumer of palladium and could increase its consumption in the years ahead.
The metal is also used in small volumes in the electronics and medical industries as well as for fine jewellery as an alternative to platinum. Palladium’s abnormal capacity to absorb hydrogen – 900 times higher than its own volume – makes it extremely valuable for the nuclear industry. One expert sees reasons for optimism about the palladium market compared to platinum. As fuel and electricity costs rise, more mining operations could close or consolidate. The Chicago Mercantile Exchange offers a contract on palladium that settles into 100 troy ounces of the commodity. The United States is a large importer of palladium and has a recent history of tensions with Russia.
Palladium futures surged above $1,600 per ounce for the first time since February 9, helped by prospects of robust Chinese demand and a weaker dollar. In other news, China’s new car sales increased by 9.7% to 2.45 million units in March, and the automobile output reached 2.58 million units, up 15.3% from a year earlier. On the supply side, major commodity producer Norilsk Nickel expects the planned plant maintenance to reduce output by 8% to 14% this year. Palladium is also used in the manufacturing of multi-layer ceramic capacitors and for plating in various consumer electronic products. It is highly useful for developing carbon monoxide detectors as palladium chloride readily catalyses carbon monoxide gas to carbon dioxide. It is also beneficial to the dental industry as it is used to create inlays and dental bridges.