Heightened geopolitical tensions and the risk of an all-out Russian invasion into Ukraine have bolstered a palladium exchange traded fund.
The abrdn Standard Physical Palladium Shares ETF (NYSEArca: PALL) jumped 26.4% over the past month, with the palladium spot price now hovering around $1,072 per ounce.
According to analysts, platinum group metals are looking at a perfect storm due to heightened geopolitical uncertainty between the U.S. and Russia over Ukraine that could threaten market supply, and palladium is already in deficit, Kitco reports.
“Any disruptions in palladium market will only send prices higher,” Bark Melek, head of commodity strategy at TD Securities, told Kitco.
Russia is one of the world’s largest palladium-producing countries, and analysts have warned that any escalation in the conflict with Ukraine would exacerbate global supply concerns. Russia produced 2.6 million troy ounces of palladium in 2021, representing 40% of global mine production. The country is also a relatively large platinum producer, contributing 641,000 ounces of platinum, or about 10% of total mine production.
ETF investors may also track the platinum market moves through something like the abrdn Standard Physical Platinum Shares ETF (NYSEArca: PPLT).
Meanwhile, platinum is also gaining momentum. Daniel Briesemann, precious metals analyst at Commerzbank, noted that while Europe continues to see weak vehicle sales numbers, which does not look good for demand for platinum used for pollution-fighting autocatalysts, the precious metal could pick up in response to improving car sales ahead.
“The ACEA is blaming this on the continuing chip shortage. It is cautiously optimistic about this year; however, last week it predicted that new car registrations would increase by 7.9% to 10.5 million,” Briesemann said. “Nonetheless, this would still leave new car registrations nearly 20% below their 2019 pre-crisis level.”
Briesemann, though, warned that unlike palladium, the platinum markets remain well-supplied.
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