The team of economists at research outfit Capital Economics is bullish on the outlook of Palladium, a metal that has seen some recent bullish action in the markets. Capital Economics believes that palladium’s demand-side fundamentals give it an edge to outperform platinum.
Capital Economics cites the massive cut in Nornickel’s production guidance for 2021, mentioned in my analysis of this metal last week, as a major factor that could prop up palladium prices. Production of both metals is expected to firm up to 93% of the levels seen in 2019, which could eliminate the supply-side fundamentals from the equation, they say. This leaves demand factors to exert a rising trend in palladium prices, with a recovery in car production expected to be part of this demand.
Nornickel is the world’s largest palladium producer. It issued a 2021 guidance that could see a massive cut to its production after two of its major mines in Siberia were hit by severe flooding. The mines are not expected to be back into operation until June 2021 at the earliest date.
Following the pullback from the 2727.82 resistance, palladium has found support at the 2596.36 price level. a bounce on this area allows palladium to retarget the 2727.82 resistance. However, the price has started to narrow considerably into a triangle pattern, so this move may occur in the context of a breakout.
On the flip side, a breakdown of the triangle also takes out 2596.36, allowing 2500 to come into the picture as initial support. 2424.44 and 2277.81 also line up as additional targets to the south.
