What Drives Palladium Prices? Factors Explored and Considered

Real assets are a fantastic hedge against inflation, and growing your portfolio with precious metals is a foolproof way to keep your net worth safe in uncertain economic times. While gold and silver get most of the attention, palladium is another precious metal worth considering. But there are a few things you should know about palladium price trends before you start buying. Let’s explore some of the key drivers of palladium prices so you can make an informed decision about growing your asset portfolio.

Supply and Demand

As with any commodity, palladium prices are driven by the basic laws of supply and demand. When there’s more demand for palladium than there is available supply, prices will go up. Similarly, when there’s more supply than there is demand, prices will fall. 

Geopolitics

World events can seriously affect palladium prices. Russia and South Africa are the world’s largest sources of palladium, and geopolitical tensions and supply chain disruptions that affect those parts of the world naturally impact palladium’s price. Russia’s invasion of Ukraine, for example, caused the price of palladium to hit a record high of $3,440 per ounce in March 2022. 

Automotive Industry

The automotive industry accounts for most of the world’s palladium consumption. Most of it is used in catalytic converters, which use palladium to help neutralize harmful pollutants in car exhaust. That means the health of the automotive industry correlates directly with the price of palladium. A robust auto industry means higher demand for palladium, driving up prices. 

Recycling and Substitution

The recycling and substitution economy also affects the price of precious metals. Metals such as platinum and rhodium are often used in new catalytic converters alongside recycled palladium, causing prices to drop naturally. That means a robust recycling and substitution market can cause palladium prices to trend down. 

Conclusion

Palladium plays a critical role in industrial uses, so its price is a good way of interpreting trends in other areas of the global economy. Now that you’re aware of the market forces that affect prices, you can be prepared to grow your asset portfolio with palladium and other precious metals. Nationwide Coins is here to answer any questions you may have about purchasing palladium. Our experts can help you seamlessly enter the palladium market and hedge against inflation and market volatility. Contact us today to learn more!