Palladium

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Tobias Robinson

Tobias is a UK director and partner at Investing.co.uk. He provides commentary on the financial markets in the UK and supports the testing team with first-hand observations from over two decades of active trading.

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James Barra

James is a UK-based writer and investor with consultancy experience at some of Britain's largest financial organisations. James authors, edits and fact-checks content for a row of investing websites.

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William Berg

William is an experienced investment writer with a history in forex trading software localization and IPO consultancy. He contributes as an author and fact-checker for established financial websites.

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Palladium trading is popular due to its widespread applications and scarcity, plus its appeal during times of uncertainty. This article explains how to trade palladium online, from price analysis and market forecasts to trading hours in the UK. Our team have also listed the best palladium brokers and platforms:

Palladium Trading – The Basics

Palladium is a gleaming silvery-white metal discovered in 1803 by English chemist William Hyde Wollaston. It is thirty times scarcer than gold and over half of its current production is used in catalytic converters. Requirements to reduce carbon emissions increase demand for it, while the transition to electric vehicles militates against this.

Palladium is also used in electronics, dentistry, medicine, groundwater treatment, hydrogen purification and jewellery. Malleable to extremely thin sheets it is also a key component in fuel cells and solar panels. Environmental concerns suggest continuing demand for the commodity.

Russia is the top producer of palladium accounting for 39% of global production, followed by South Africa, Canada, the US and Zimbabwe.

Relatively dormant in the markets prior to the mid-nineties, palladium trading since has seen significant peaks and troughs, though the movement has been mostly upwards.

Palladium is priced per ounce and reached an all-time high on 3 May 2021, when an ounce was priced at $2,981.40. Low points have been in 2003 when it fell to $170.35, and during the global financial crisis of 2007- 2008 when it dropped to a value of $178.95. A lesser dip to $502.10 came in January 2016.

What Moves The Price Of Palladium?

Supply

As with all commodities, supply drives changes in the palladium trading price.

Palladium’s market value of $2,548.10 on 28 February 2020, for example, came as a result of supply shortages. Disrupted production in the automotive industry due to the Covid-19 crisis led to a decrease in value, while Covid-related shutdowns also interrupted production in South Africa. A global semiconductor shortage in December 2021 also lowered automotive production, and with it, the value of palladium.

Flooding in Russian palladium mines affected a surge in value in May 2021 as demand continued to grow. Russia’s invasion of Ukraine in February 2022 has led to further uncertainty in the palladium market, as speculation continues regarding global supply lines.

Demand

Demand for palladium shows changing patterns. The chemical industry is a sector showing increasing demand, with 2021 seeing particularly high consumption.

By contrast, consumption has decreased in electronics as nickel has become preferred in capacitors used in power supply circuits. Consumption in dentistry has similarly declined as the cost of palladium has driven dentists towards lower-cost alternatives.

As the automotive industry is the primary consumer of palladium, demand for it is affected by governments enforcing stricter emissions restrictions. In time this demand is expected to subside as electric vehicle production increases. New applications requiring palladium trading, however, may well open up.

Strength Of The Dollar

Palladium tends to increase and decrease in value in inverse proportion to the value of the US dollar against other currencies. Essentially, a weak dollar typically means a higher palladium price and vice-versa.

Market Sentiment

Another key factor moving palladium prices is market sentiment.

The palladium metals market offers low liquidity and volume when compared to gold, silver and platinum. Investors are more likely to use palladium to hedge and diversify their portfolios, and will be influenced by market sentiment. This has its own effect on the volatility of palladium prices.

Why Trade In Palladium?

Volatility in trading palladium brings its own opportunities and risks.

In general, traders will include it as part of a broader metals portfolio alongside gold and silver. Trading solely in palladium is less common due to the volatility we have indicated.

When part of a broader portfolio palladium can provide protection in times of inflation and economic instability. It shares the financial qualities of other metals in this regard.

What stands in favour of trading palladium is the demand for the metal in a wide variety of applications, which leads to huge industrial and commercial demand. In addition, its rarity alongside environmental policies inhibiting its extraction can lead to supply deficiencies which enhance its value.

How To Start Trading Palladium

Numerous vehicles are available to start trading and investing in palladium online:

Stocks

You can invest in the metal by buying shares in companies involved in palladium production. Companies to consider include:

• Silbanye Stillwater (2013, South Africa – specialises in palladium, platinum and gold and also owns Stillwater and East Boulder palladium mines in the US)
• Ivanhoe Mines (1993, Canada – develops and explores various metals and minerals. Its primary operations are in Africa)
• Anglo American Platinum (1995, headquarters in South Africa – specialises in the platinum group of metals with wide global reach and involvement in palladium recycling)
• A-Mark Precious Metals (1965, current location in the US – focuses on marketing and distribution. It serves many countries including the UK)
• New Age Metals (1996, Canada – the owner of one of the largest undeveloped palladium projects in the US and has funding ties with Mineral Resources Limited, Australia)

CFDs

Contracts for difference (CFDs) are a contract between a trader and a broker. They amount to a bet with regard to whether a commodity will gain or lose value between the start and end of the contract. The trader either earns or pays the final difference, less any fees.

CFDs offer the advantage of initial low outlay since the contract concerns price rather than physical possession of the commodity, which would entail costs in storage and transportation. Trades can also be leveraged, meaning a multiplication of potential gains and losses.

Spread Betting

This also involves exposure to the value of palladium without its physical ownership. A key difference between spread betting and CFDs is that here the trader speculates only on whether the price of the commodity will rise or fall by a defined time. How much they stake on this outcome is in the hands of the trader.

Spread betting is also usually tax-free in the UK.

Futures

Trading palladium futures is also a popular approach. Futures are a contract with a broker to buy a defined quantity of palladium for a specified price at a particular date in the future.

A futures contract can be settled with a broker before expiration by rolling forward to a new futures contract or by exchange for a spot trade.

Options

Options are similar to futures contracts, but give the option not to buy or sell at the contract’s expiry. Traders pay a premium for this flexibility.

Spot Trades

Spot trading involves buying a certain quantity of palladium at the current market price. This enables you to buy physical palladium in the form of coins or bars, for example, that could serve to hedge against the risks involved with other assets.

A spot trade can take the form of a paper product with a brokerage or other intermediary who will store and insure the palladium itself.

ETFs

Exchange-traded funds (ETFs) generally combine various stocks into a single cluster that is then placed on a stock exchange and traded as a single product. In this way, they can be bought and sold like regular company shares.

ETFs have the advantages of simplicity and flexibility, allowing the trader to diversify their portfolio and/or hedge. These palladium products can also offer leverage and inverse leverage through derivative ETFs.

Choosing Palladium Brokers

Success or failure in palladium trading can partly depend on your choice of brokers. In general, you should look for palladium brokers that offer the following:

FCA Regulation

The FCA oversees the best trading brokers serving the UK retail market. It facilitates legal action against brokers in the case of disagreements. It caps leverage at 1:5 for trading palladium derivatives. The regulator also ensures access to investor compensation schemes and measures like negative balance protection.

Trading Platform

Check the broker offers a user-friendly and efficient palladium trading platform, such as MetaTrader 4, MetaTrader 5 or cTrader.

They should offer good features for technical and fundamental analysis. Advanced research resources and learning materials will also enhance your experience.

Trading Vehicles

It is important to choose a broker that offers the palladium trading vehicles that best suit your investing style and financial needs.

Platinum futures or ETFs may suit a longer-term investor; day traders could consider brokers that offer vehicles such as CFDs or spread betting.

Fees

You need to consider the costs of deposit, withdrawal and any other charges. Also look for tight spreads and low/no commission fees.

CMC Markets, for example, for its palladium cash price offers a minimum spread of 24.90. Margin rates (the amount of capital to open a position) are 10%. There is no minimum deposit and no withdrawal charges.

Customer Service

In palladium trading, as with the use of any services, challenges can arise. You need to be confident that your broker is committed to customer support and that you can communicate with them when you need to. This may mean 24/5 or 24/7 availability. At the least, ensure that the broker’s schedule aligns with your own trading hours.

Trading Hours UK

Palladium trading hours are generally 23:00 to 21:59 GMT Monday to Friday. Palladium is primarily traded on the New York Mercantile Exchange (NYMEX).

The palladium trading symbol is PA:NMX. Note, palladium brokers may have their own symbols for the metal on their trading platforms.

Bottom Line On Palladium Trading

Palladium trading offers investment opportunities given its scarcity, volatility and the important role it plays in various industries. Those interested in metals investments might consider diversification in purchasing palladium to accompany their gold and silver holdings.

To start trading today, head to our list of top-rated palladium brokers.

FAQ

How Can I Invest In Palladium?

There are several ways to invest in palladium including via futures, contracts for difference (CFDs), exchange-traded funds (ETFs), and stocks of companies involved in the mining/production, distribution and use of the soft metal. The best palladium trading brokers offer a choice of vehicles and services to suit different trading timeframes and strategies.

Is Palladium A Good Investment?

It could be argued that because of its importance to the automotive industry and technologies combatting climate change, palladium is an attractive future investment. Current geopolitical events, however, make supply and demand uncertain, though some analysts expect greater stability in the coming years.

Palladium may also be a good investment for those looking to diversify their portfolios. It is a volatile commodity that often sees sharp price fluctuations, which in turn creates opportunities for profits. It can also be used as a hedge since it tends to retain its value during market downturns.

Which Are The Best Brokers For Trading Palladium?

The top UK brokers for investing in palladium include Pepperstone, which offers user-friendly trading platforms, a minimum deposit of £200, plus low commissions for palladium and other commodities. CMC Markets has London headquarters and is listed on the LSE. It offers competitive spreads on a range of assets, including palladium, via its Next Generation platform. eToro has a beginner-friendly copy trading feature which allows the inexperienced trader to follow the movements of established investors. You can set your account to invest in the same palladium trades that others make.

Is Trading Palladium Easy?

As with any online investing, trading palladium has its challenges with notable price volatility. Palladium trading requires being abreast of news updates and market economics, particularly those affecting countries involved in its production, notably South Africa and Russia. Any political upheavals or economic shifts within these locations can largely impact the price of palladium.

Article Sources

• Palladium production data
• Palladium uses and properties
• CMC Markets palladium trading fees