Palladium found support over the buyers zone of $ 1275-1310/oz. The avalanche-like decline has stopped near this price area and now there is a local correction on the market. This may still be a dead cat bounce, so now traders should watch over the situation very carefully. In the worst case, the next sales wave may lower the quotes to $ 1160-1200/oz zone.
Market participants opinion is controversial. Back in early March, analysts at Bank of America Merrill Lynch (BoAML) raised the forecast value for the current year to $ 2,000. A recent survey made by Bloomberg suggests that by the end of the year the metal will cost about $ 1,300 per ounce.
Analysts at Johnson Matthey (JM) believe that over the past year, the palladium deficit in the world market has decreased significantly. Shipments increased due to sales from manufacturers' stocks and recycling. The large liquidation of ETF assets also held back demand: in 2018, investment demand declined by 555 thousand ounces, in 2017 - by 386 thousand ounces, in 2016 - by 646 thousand ounces. At the end of last year, ETF stocks were about 730,000 ounces.
"Market came close to balance in 2018. However, price movements and the availability of physical metal indicate that the market is in structural deficit," JM experts say. According to them, in 2019 the palladium deficit may increase dramatically. The main reason - the reduction in ETF stocks at the end of last year, funds will no longer have enough metal to bridge the gap between industrial demand and supply.
This is another reason to believe that even if there is a speculative bubble in the market, it is likely that this is still not the final correction and the market will bring new historical highs.