Hits 5-year low

Persistent concerns regarding global economic activity continue to negatively impact palladium prices.

On the other hand, the increasing demand for electric vehicles is also negatively affecting palladium prices.

Analysts stated that palladium is used in the production of catalytic converters for automobiles, noting that as demand for electric vehicles rises, forecasts suggesting a decline in demand for conventional cars are increasing, which has brought concerns about palladium demand to the forefront.

Palladium has been among the commodities most affected by recession fears. Concerns regarding a global supply surplus have caused the price of palladium to decline.

Concerns that the US Federal Reserve (Fed) will continue its tight monetary policy are also causing sharp fluctuations in the commodity market. This situation has also exerted downward pressure on palladium.

Analysts also noted that automobile manufacturers are shifting toward platinum, which is cheaper for catalytic converter production, and that this is suppressing palladium prices.

With these developments, the price of an ounce of palladium hit its lowest level since August 2018 at $949.80. Thus, palladium has fallen below $1,000 for the first time in 5 years. Palladium has lost more than 45 percent of its value since the beginning of the year.

A downward trend has been observed since last year

In March 2022, the price of an ounce of palladium reached an all-time high of $3,435.50. At that time, palladium had hit a record high due to supply concerns stemming from the Russia-Ukraine war.

Futures and commodities market expert Zafer Ergezen told AA reporters that while palladium climbed above $3,000 in 2022, it has followed a consistently downward trend since then.

Stating that demand for palladium increased particularly in the period leading up to 2022, Ergezen noted that the biggest reason for this was the demand coming from the automotive sector.

Ergezen explained that supply chain disruptions during the COVID-19 pandemic and the subsequent reopening of economies led to a rise in commodity prices, which pushed the price of palladium above $3,000.

Stating that one of the reasons for palladium's loss of value is slowing demand, Ergezen assessed, "With rising interest rates, a slowdown has begun to be seen in economies. This slowdown has affected demand in both the automotive sector and other areas."

Ergezen noted that another reason is related to the transformation of the economy. He emphasized that palladium is important in the automotive sector for the conversion of toxic gases.

Stating that the automotive sector is changing, Ergezen said, "Electric vehicles have now started to come to the forefront much more, and as a result, as the products used in the automotive sector change, the demand for palladium has fallen accordingly."

Ergezen emphasized that the change in the automotive sector could continue from here on out.

News Source: 12punto