Palldium and platinum price forecast 21 September 2021 | XPDUSD and XPTUSD Fundamental analysis
In early 2021, XPDUSD and XPTUSD were growing in price, but the market sentiment has changed now. This is due to a shortage of semiconductors and a sharp drop in automotive demand. Let us discuss this topic and make up a trading plan.
Quarterly fundamental forecast for platinum and palladium
Sharp supply cuts due to the pandemic and hopes for a robust global economic recovery driven by fiscal and monetary stimulus allowed palladium and platinum to hit all-time and a seven-year high in May and February, respectively. However, the reality does not always meet expectations. Due to the lack of semiconductors, the XPDUSD and XPTUSD bulls were set back. Drawdowns by 37% and 31.2% look impressive, but the prices could continue falling.
Automakers consume around 80% of the roughly 10 million ounces of palladium used each year and 40% of platinum demand of 8 million ounces a year, making platinum less vulnerable to the chip shortage. Around 7 million fewer light vehicles will be produced this year than initially thought pressing down the demand for precious metals. Platinum-group metals are down, which is worsened by the bearish trend in gold, the leader of the precious metals sector, amid the Fed’s intention to normalize monetary policy.
The longer the semiconductor shortage lasts, the worse the analysed assets will perform. However, prices could recover in 2022-2023. Both platinum and palladium will face huge stockpiling over the medium term, while automakers have cut inventories and will be forced to overproduce once the chip shortage is resolved. Considering the permanent supply shortage in the past and the higher share of use in the production of catalytic converters, the price rebound for the XPDUSD is more likely than for the XPTUSD.
Dynamics of balance of platinum-group metals market
On the other hand, The World Platinum Investment Council expects higher costs of palladium, used in vehicle pollution-control devices, to spur a gradual switch by automakers to using more platinum. However, this factor did not work very well before the pandemic.
Thus, the long-term outlook for platinum-group metals amid a potential overproduction of cars in the second half of 2022 – in 2023 looks bullish. Nevertheless, the downtrend will hardly reverse in the medium term. Therefore, speculators increased platinum short positions to the highest level since early 2019. Palladium short positions have been the highest over at least 4.5 years.
Dynamics of platinum speculative positions
Dynamics of palladium speculative positions
Quarterly trading plan for platinum and palladium
The market is bearish. If investors consider the FOMC September forecasts for the interest rates, gold will drop, triggering new sell-offs in other precious metals. Platinum could go down to $830 and $725, and palladium could drop to $1670 and $1590 per ounce. I recommend selling both metals.
Price chart of XPTUSD in real time mode
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