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Palladium Prices

Palladium Spot Price Today

What Drives the Price of Palladium

Palladium prices can be subject to some volatility, though they are often higher even than gold. Here are a few of the most influential factors behind the price of this precious metal:

Auto Industry Demand – Much like platinum, the demand from the auto industry is by far the biggest driver of price when it comes to palladium. While platinum is a widely used, and adequate substitute, palladium is the number one choice for most in the production of catalytic converters globally. This means that new car demand, particularly from the US and China, tends to have a huge influence on palladium prices.

Political Climate – Again with similarity to platinum, the vast majority of global palladium on the market comes from Russia, and South Africa. Particularly concerning the Russian supply operations, these can be volatile depending on the geopolitical climate of the day. With such a dependence on these areas for supply, any disruption for whatever reason, can trigger a price movement on the exchanges.

Substitution – Platinum is considered a viable substitute for palladium in the auto industry, and palladium is often substituted in the production process when it comes to diesel vehicles. The price of palladium also has an impact here. At higher prices, the attractiveness of a substitute metal is increased. This is something which can have a direct influence on palladium prices.

Environmental Concerns – Governments around the world are tightening up increasingly on vehicle emissions. This has prompted the need for vehicle makers to use more precious metals in the production of higher quality converters which can further limit pollution. Such a move places an increasing demand on palladium, which, with an already restrictive supply, tends to drive prices higher.

Historical Palladium Price Charts

Why Palladium Matters

Palladium may well be the least well-known of the four most common precious metals. Currently though, and at many times throughout recent years, it is easily the most valuable in terms of market price.

With this value comes a certain amount of volatility, though to understand the high price and why palladium is of such importance, you must first understand the production process. Palladium is a by-product of mining other metals, namely platinum or nickel. This means it can be very difficult to produce, and so the supply is usually minimal, and well-controlled.

This is of big significance since palladium is the key precious metal which is vital in the production of catalytic converters for gasoline-based cars. While it is true that high palladium prices can prompt a move to substitute metals such as platinum, when it comes to gasoline based cars at least, palladium delivers a much better quality. This keeps it in focus, regardless of price changes.

Of course there are other industrial uses for palladium too which help it to retain importance. These include use in dentistry, and a level of desirability in the jewelry sector. All factors and uses combined mean that, although it may be the most expensive precious metal, this value is not without solid reason.

 

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