Palladium rose 76% in 18 months! Will it surpass gold in the next few years?

 Since 2016, palladium has led the commodity, rising 76% in 18 months. Lack of supply and a large number of orders are the two major factors driving up the price of palladium. Analysts point out that in the long run, palladium may first correct downward, followed by a rally, and it is not impossible to surpass gold.

       Palladium rose 76% in 18 months. With the market generally believing that palladium will usher in its sixth consecutive year of undersupply, palladium has risen 28% this year. In mid-June, it hit its highest level since 2001 at $928. What's more amazing is that since 2016, palladium prices have started to fluctuate upward and have now risen 76%.

       At 11:38 Beijing time, spot palladium fell 0.17% or $1.53 to $888.55 an ounce. Spot palladium daily chart supply shortage of palladium supply is a major driver of the precious metal's recent price rise. The world's major palladium producers have all but stopped increasing supply since 2012, but the growth in automobile consumption in recent years has continued to boost palladium demand, resulting in a shortage of supply in the palladium market.

       Caroline Bain, commodities analyst at Capital Economics, said that while palladium stocks in recent years may help meet consumer demand, the supply may be drying up. And Brad Yates, a trader at Elemetal, a US precious metals producer, also said that the market is currently in a severe shortage, and there is almost a single ingot of palladium in stock. Rene Hochreiter, an analyst at Noah Capital Markets Ltd., said that palladium's fundamentals are the strongest of all commodities, and the price of palladium could easily surpass platinum in the short term. The large number of multiple entries into the futures market also sends a signal that traders are buying palladium.

       According to the latest report on traders' positions released by the US Commodity Futures Trading Commission (CFTC), the market's bullish sentiment on palladium has heated up, which is another factor driving the price of palladium higher. As of last Tuesday (June 13), although speculative long and short positions in palladium have increased, the increase in long positions is higher than that of short positions, which makes the net speculative long position of palladium rise to 24,546 lots. It is worth noting that the net long position of palladium held by fund managers climbed to the highest level since 2013 during the week of the report.

       Long-term trend: palladium or close to 1200 As for the next long-term trend of palladium, from a technical point of view, the financial blog ElliottWave-Forecast pointed out that palladium has started to fluctuate and rise since the low point in 2003, and the recent one-year rally may open a new upward channel. If the current trend continues, palladium is likely to correct downward for the rest of the year, and then usher in another rebound in early 2018, or will be close to $1200/ounce line. With bitcoin hitting $2168 this year, exceeding the historical high of gold, ElliottWave-Forecast predict that palladium is also expected to surpass gold in the future.

       At present, although the price ratio of gold to palladium remains at the level of 1.44:1, the ratio has started to fluctuate since 2016 and is still in a downward channel. If palladium maintains its current strong upward momentum, it may not be a dream for gold/palladium to fall below 1:1 in the next few years.