Looking forward into 2021: Palladium and platinum price analysis | Invezz


Platinum has had an outstanding performance lately and palladium may follow up as investors are looking for assets expected to have a bullish run. 

Fundamental analysis: Higher demand for metals

Both metals had been recording gains in 2020, and the future outlook suggests that the two metals might have an even better 2021. Platinum and palladium have unique industrial functions as platinum is used for purifying diesel-engine emissions while palladium is used in gasoline-powered vehicles. 


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Daniil Manaekov, an economics forecaster at the University of Michigan pointed out that car sales in the U.S. might jump to 16.3 million units by the end of next year, higher than the previous forecast of 14.5 million in 2020.

Furthermore, car sales in China are expected to hit 27.227 million in 2021 compared to 22 million this year. 

“The improving outlook for the Asia-Pacific auto sector reflects expectations that auto demand will recover by more than 10% in 2021, compared with an expected decline of nearly 20% in 2020 due to impact of the coronavirus pandemic,” said rating agency Fitch. 

“If we were to choose a single industrial metal whose value is most likely to rise in 2021, we would bet on palladium,” Capital.com said in its outlook report last month.

Moreover, palladium could hit its new all-time record and break above $3,000 in 2021, according to the famous forecaster Metals Focus.

“Quite possible—in the next five years—we can see $4,000 an ounce,” said the metals research consultancy. 

Technical analysis: Room for growth

Platinum is currently trading over 10% in December, following gains of more than 13% last month. At this rate, Platinum is likely to finish 2020 about 10% in the green. On the other hand, Palladium jumped roughly 19% between July and September and has stayed relatively flat after that. The metal is on the pace to close over 20% higher YTD.

Platinum monthly chart (TradingView)

Palladium price is now trading at $2,345 after hitting an all-time high at $2,875 in February. The bullish fundamental environment may yield higher levels as we head into 2021. Looking higher, trades looking to buy palladium are likely to target: $2,585, $2,875 and $3,250.

Palladium monthly chart (TradingView)

On the other hand, platinum price is currently fighting the key multi-year resistance at $1,080. This is where the 100-MMA is located, and this month’s encounter is the first since August 2014. If broken, the next key level above for platinum investors is seen at $1,200.

Summary

Platinum and palladium could surge in 2021, boosted by its unique functions in the car industry.



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