The ETFS Physical Palladium (NYSE:PALL) Shares is in focus these days, as the underlying precious metal rises to levels not seen since 2001.
Palladium jumped 7% on Friday alone, spurred by co-called backwardation in the market. Backwardation is a phenomenon in commodities where the futures prices for an asset are below the spot price, which normally causes a sharp short-term rally.
Reuters reports that a combination of rising demand and weak supply are also partially to blame for palladium’s run:
“The background for palladium is for good industrial demand and likely a significant market deficit this year, and on top of course you’ve got this speculative squeeze,” Mitsubishi analyst Jonathan Butler said.
“The backwardation has got a lot steeper in the last day. Metal for immediate delivery is very tight, and that is being reflected in those forward rates moving into an even steeper backwardation.”
Traders reported a reluctance to lend the metal, suggesting tightness in near-term supply. Chart patterns indicate that the metal is vulnerable to a sell-off from these elevated levels, however, technical analysts said.
Palladium continues to be a standout among precious metals. As gold and silver continue to trade in a tight range, the lesser-known palladium’s rally has gained serious momentum, with the metal gaining nearly 60% over the trailing twelve months.
The ETFS Physical Palladium Shares (NYSE:PALL) closed at $84.38 on Friday, up $2.44 (+2.98%). Year-to-date, PALL has gained 29.40%, versus a 8.89% rise in the benchmark S&P 500 index during the same period.
PALL currently has an ETF Daily News SMART Grade of A (Strong Buy), and is ranked #4 of 33 ETFs in the Precious Metals ETFs category.