Palladium Investment Guide: A Complete Analysis from Price Fluctuations to Trading Strategies

What is Palladium? Why Is It Worth Paying Attention To?

Palladium is considered one of the most stable, hardest, and most expensive precious metals, and it is also one of the most volatile investment assets. This rare white metal was discovered in 1803 by British chemist William Hyde Wollaston in platinum ore. Its name is derived from the Greek goddess of wisdom, Athena(Pallas Athena).

In modern industry, palladium has a wide range of applications—from automotive catalytic converters, electronic components, dental restorations, to various metal alloy manufacturing. Among these, the automotive industry accounts for 80%-85% of global palladium demand, making the development trends of the automotive sector directly influence palladium prices.

The core value of palladium in the automotive field lies in its excellent catalytic performance—it effectively reduces exhaust emissions from internal combustion engines. As global environmental standards become increasingly stringent (such as China’s “National VI” standards, the EU’s “Euro 6” regulations, etc.), industrial demand for palladium continues to be stimulated. Therefore, it can be said that the future demand outlook for palladium is closely related to the emission control trends of the global automotive industry.

Current Global Palladium Supply: When Will Tensions Ease?

From the supply side, palladium production is highly concentrated. Russia is the world’s largest palladium producer, followed by South Africa in second place. However, this centralized supply structure carries risks—Russia’s palladium reserves are declining year by year, and South Africa faces frequent strikes and power crises that limit output. This supply-side fragility makes palladium highly sensitive to geopolitical fluctuations, natural disasters, and industry upheavals.

Unlike gold, palladium lacks traditional safe-haven attributes, but due to its prominent industrial nature and inflexible supply, it becomes a commodity highly sensitive to geopolitical tensions, production fluctuations, and industry demand. For traders willing to accept higher volatility, palladium offers abundant short- and medium-term trading opportunities.

A Decade in Review: From 160% Gains to Deep Corrections

To assess whether palladium is a worthwhile investment, one must first review its historical performance.

2017-2019: The Golden Era

This period marked a bull market for palladium. Tightening global automotive emission standards drove a surge in demand for catalytic converters, while supply faced pressure due to intermittent mine closures caused by South Africa’s power crises and slowed capacity growth in Russia. The supply-demand imbalance intensified, with palladium prices soaring from about $730/oz in early 2017 to $1,900/oz at the end of 2019, a cumulative increase of over 160% in three years, outperforming other precious metals.

2020: Black Swan Event and Subsequent Recovery

The outbreak of COVID-19 in 2020 instantly changed the narrative—global economic activity sharply slowed, the automotive industry was hit hard, and palladium demand contracted sharply, causing prices to drop to $1,460/oz in March. However, large-scale fiscal and monetary stimulus measures implemented by various countries quickly reversed the trend. The automotive sector rebounded strongly, and with slow restart of South African mines and disrupted international logistics, supply bottlenecks persisted. Palladium rebounded strongly in 2021, reaching a historic high of $3,017/oz in May.

2022 to Present: High Volatility and Structural Adjustment

In early 2022, the Russia-Ukraine war broke out, and fears of supply disruption from Russia pushed palladium prices to a record high of $4,440/oz. However, this rally proved unsustainable—rising electric vehicle penetration reduced demand for traditional catalytic converters, and global economic slowdown cast a shadow over commodities, leading to a sharp retreat from the highs. The dual uncertainties on supply and demand caused prices to oscillate between $1,500 and $2,200/oz from 2023 to 2025.

Palladium Price Outlook in 2025: Current Trends and Future Prospects

As of June 2025, palladium prices are showing a weak oscillation pattern. Starting the year at $1,140, prices briefly rebounded to $1,260 in March, but due to rising electric vehicle penetration (global share 22%-25%) and sluggish car sales, prices fell to lows of $1,030-$1,080 in May. In June, supported by short covering and a weaker US dollar, prices rebounded to around $1,110, but the annual decline remains over 10%.

Three core factors currently influencing palladium prices:

1. Structural demand shifts: According to the International Energy Agency(IEA), by 2025, global electric vehicle share will reach 22%-25%, further reducing demand for traditional internal combustion engine catalytic converters. Slowing sales growth in Europe and China, the largest auto markets, directly suppress actual palladium consumption.

2. Relatively stable supply: Despite sanctions, Russia continues exports through neutral markets; South Africa’s improved power supply gradually restores local capacity. Compared to weak demand, supply-side negatives have eased somewhat.

3. Market sentiment turning bearish: Investment funds favor gold and silver, driven by geopolitical tensions in the Middle East and central bank gold buying. In contrast, as an industrial metal, palladium receives less safe-haven inflows during demand downturns, with ETF holdings and net futures positions declining continuously.

Outlook for the second half of 2025 and beyond:

Looking ahead to the second half of 2025 and longer-term, the palladium market will continue to be dominated by structural demand weakness. Bloomberg NEF forecasts global EV penetration exceeding 25%, and with the slowdown in traditional auto sales, industrial palladium demand is unlikely to see significant recovery.

Based on the baseline scenario from the World Palladium Investment Committee(WPIC) and Citi’s commodities research (assuming stable supply and global GDP growth of 2.5%-3%), the average palladium price will range between $1,050 and $1,150 per ounce. Technically, if prices reach a long-term support level of $900, a technical rebound could be triggered.

Risk Scenario Analysis:

• Upside risks: New sanctions on Russian exports, mining accidents in South Africa, or breakthroughs in hydrogen energy applications could temporarily push prices higher, reaching $1,300-$1,400.

• Downside risks: Further downturns in China and Europe’s auto markets, or sustained strength of the US dollar suppressing overall commodity prices, could cause palladium to fall below $1,000, testing support at $900-$950.

Why Are Investors Optimistic About Palladium? Four Core Advantages

1. Inflation Hedge Function

Like gold, palladium is dollar-denominated. When the dollar depreciates, palladium priced in USD tends to rise, making it an effective hedge against inflation. A weakening dollar environment is highly favorable for palladium holders.

2. Fundamental Supply-Demand Support

The continued growth of the automotive industries in major economies like the US and China drives long-term demand for palladium. On the supply side, strikes and underinvestment have limited mine output, making supply unable to meet demand. The dual effect of decreasing supply and increasing demand provides strong fundamental support for higher prices.

3. High Volatility and Trading Opportunities

Compared to gold and silver, palladium reacts more sensitively to supply and demand changes, with more pronounced price swings and clearer technical signals. This makes it particularly suitable for short- and medium-term trading and swing strategies.

4. Rigid Industrial Demand and Lack of Substitutes

Over 80% of palladium flows into automotive catalytic converters for exhaust purification. During gasoline vehicle manufacturing, reliable substitutes for palladium are scarce, creating a rigid demand that provides solid fundamental support for prices.

The Best Way to Enter Palladium Trading: Contracts for Difference (CFD)

For retail investors, palladium futures require high capital and are constrained by delivery dates—positions must be closed or rolled over at expiry, making operations complex. In contrast, palladium CFDs offer higher flexibility and lower barriers, becoming the preferred choice for most retail investors.

CFD prices directly track the underlying asset (spot palladium), so investors do not need to physically hold palladium or sign futures contracts. Its main advantages include:

• Very low minimum trading volume: as low as 0.1 lot, suitable for small capital
• 24/7 trading: no restrictions on trading hours
• No fixed delivery date: can hold or close positions at will
• Two-way trading: support for both long and short positions, profiting from rising and falling markets
• Risk management tools: built-in stop-loss, take-profit, and negative balance protection

Compared to physical palladium, futures, or ETFs, CFD trading also offers leverage, allowing investors to amplify returns while managing risk.

How to Start Trading Palladium CFDs?

Using mainstream CFD platforms, the process generally involves three steps:

Step 1: Open an account and deposit funds

Visit the platform’s official website, fill in personal information, and submit an application. After identity verification, fund your account. The entire process usually takes 10-30 minutes.

Step 2: Analyze the market and seize opportunities

Before placing an order, use technical analysis tools to judge price trends. Beginners can start with simple indicators like Moving Averages(MACD) and Relative Strength Index(RSI), which are effective for short-term trend assessment of palladium prices.

Step 3: Execute the trade

Select your trading direction and place an order on the platform. For example, buying palladium(XPDUSD) allows you to set position size, leverage, stop-loss, and take-profit levels flexibly. After placing the order, monitor real-time profit and loss on the position panel, and close the position for profit or loss at the appropriate time.

With this simple process, you can quickly capture trading opportunities in palladium regardless of market volatility.