Palladium soars again, sparks bubble concerns

The palladium rally continues to defy all expectations. The silvery-white precious metal, which is used in catalytic converters, has been on a tear this year that shows no signs of slowing down. It’s already notched a 20 per cent gain for 2020. On Thursday, prices rallied 5.3 per cent and surpassed $2,380 an ounce. The gains are surprising even the most seasoned market watchers, who say there’s little chance that tight supply conditions will ease. South Africa, a major producer, reported a sharp drop in platinum-group metal production in November. Adding to the bullish mood was the US-China trade truce and record car sales in Europe. “The dynamics are so strong. Nobody can tell me that this is just fundamentals,” said Commerzbank AG analyst Carsten Fritsch. “This is already becoming a bubble.” Palladium is up 69 per cent in the past year, due to a combination of tight supply conditions as stricter emissions targets force automakers to use more of the metal in catalytic converters.