Russia’s invasion of Ukraine caused supply concerns and lit a bullish fuse under palladium prices in 2022. However, the price had been rallying sine the 2008 low of just over $160 per ounce.
The last time I wrote about palladium on Barchart was back in May 2024, when I suggested that palladium, and its precious cousin, platinum, offered “an alternative to high-flying gold and silver for value investors seeking precious metals exposure.” Palladium was trading at $1,005.50 per ounce on the June 2024 NYMEX futures contract on May 22, 2024. At the $950 level on March 5, 2025, the June 2024 NYMEX futures contract was lower, but palladium futures continue to trade around the $1,000 pivot point.
Consolidation in palladium after the price plunge
Nearby NYMEX palladium futures prices dropped 17.98% in 2024, settling at the $909.80 per ounce level at the end of December 2024. While prices are higher in early March 2025, palladium continues to suffer from the price plunge since the March 2022 high.
The quarterly continuous NYMEX futures chart highlights palladium’s 76.25% from the March 2022 $3,425 high to the August 2024 $813.50 low. Over the past months, palladium prices have consolidated around the $1,000 per ounce pivot point.
Russia remains the leading palladium producer
In 2024, approximately 190 metric tons of palladium came from mine supplies.
The chart shows that Russia was the leading palladium-producing country, with 39.5% of the worldwide output. While Russia led the world in production at 75 metric tons, South Africa was a close second, with 72 tons of output.
In South Africa, palladium is primarily produced from mines deep in the earth’s crust. Russian production is mainly a byproduct of nickel output in the Norilsk region of Siberia.
U.S. energy policy could increase palladium demand
Palladium’s density and high melting point make it ideal for oil refining and automobile catalytic converters. As the U.S. energy policy has shifted under the Trump administration, palladium demand will likely increase as the “drill-baby-drill” policies will encourage gasoline-powered vehicles. More traditional cars and other vehicles will increase catalytic converter demand and increase palladium requirements. Moreover, oil refining requires palladium and the other platinum group metals.
Palladium futures are the smallest and least liquid of the precious metals
Open interest is the total number of open long and short positions in the futures market. As of March 4, 2025, open interest in the four traded precious metals trading on the CME’s COMEX and NYMEX divisions were:
- Gold- 489,270 contracts, equaling 48,270,000 ounces of gold.
- Silver- 145,935 contracts equaling 729,675,000 ounces of silver.
- Platinum- 79,207 contracts equaling 3,960,350 ounces of platinum.
- Palladium- 19,942 contracts equaling 1,994,200 ounces of palladium.
As the open interest data shows, palladium is the least liquid precious metals traded on the futures exchange. Low liquidity tends to foster high volatility, as less volume and open interest cause bids to buy to disappear when prices move lower and offers to sell to evaporate during significant rallies.
The monthly historical volatility levels in the four precious metals as of early March were:
- Gold 10.44%
- Silver 20.17%
- Platinum 26.20%
- Palladium 38.35%
Palladium’s historical volatility level indicates its penchant for price variance.
PALL is the palladium ETF product
Low liquidity and higher volatility than the other precious metals could cause a significant upward correction in palladium prices when the metal’s consolidation around the $1,000 per ounce level ends. The recent bullish price action in gold and silver could mean the odds favor the upside as platinum and palladium prices around the $1,000 levels remain historically inexpensive.
The most direct route for a risk position in palladium is the physical market for bars and coins. The futures are another option for investors and traders. The Aberdeen Physical Palladium ETF product (PALL) provides an alternative as the ETF owns physical palladium bullion. At $86.28 per share, PALL had over $335.7 million in assets under management. PALL trades an average of 136,582 shares daily and charges a 0.60% management fee.
The latest rally in NYMEX June palladium futures took the price 20.2% higher from $905.00 on December 30, 2024, to $1,088.00 on January 31, 2025.
Over the same period, PALL rose 13.2% from $82.60 to $93.50 per share. While the PALL moved higher with the palladium futures, it underperformed the metal’s price action. The ETF can miss highs or lows occurring when the U.S. stock market is closed, as palladium futures trade around the clock.
Palladium remains inexpensive compared to gold and silver at below the $1,000 per ounce level. Accumulating palladium at the current price and lower could be optimal, as the odds favor higher prices over the coming months and years.
