Our palladium price forecast for 2021 has a bearish bias. Last year, we accurately predicted that palladium would be either super bullish or super bearish, with a palladium price forecast of $2,500, with very precise conditions which were met as predicted. We explained this in great detail in our annual palladium price forecast, part of a series of global market forecasts (particularly we focus on 2021 forecasts). For 2021, however, we have a bearish bias as we see $2,500 act as resistance. As long as this is true, palladium will struggle and/or decline in 2021. Note that our palladium forecast is really different than the bullish bias in our gold forecast 2021 and silver forecast 2021.
In most of our annual forecasts we get to a pretty straightforward conclusion. That’s because we can make use of a limited though highly effective set of leading indicators, per market. This allows to forecast patterns and predict price points.
Not so with our palladium price forecast for 2021, or any other year for that matter.
The number of limited indicators for palladium is limited. Moreover, there is little to none cross market or inter market effects which we can use in forecasting or palladium price predictions.
That’s why we can only identify the decision point(s) with the bullish and bearish price targets. Obviously we will follow up as soon as we see some signals about one of the two directions materializing.
Why this palladium forecast for 2021
InvestingHaven’s mission is to forecast the top 2 or 3 investing opportunities per year.
We want to find them, play them right and take profits at the right time.
Palladium was a great candidate to become one of the top 3 investing opportunities in 2019. However, with the mini crash in March it invalidated its potential.
Whether palladium will become one of the top 3 investing opportunities of 2021 is questionable. Stated differently and in a more direct way: we don’t think so!
Our palladium price forecast for 2021 is meant to help understand if and when our prediction invalidates in order to play the palladium market in case it becomes one of the top performers in 2021.
Palladium price forecast for 2021: Summary
This is the summary of our palladium forecast for readers who don’t want to read through the entire article.
Our summary is simple yet requires more time to confirm the outcome.
- Palladium is likely going to find too much resistance around $2,500 in 2021.
- As soon as it becomes clear that palladium cannot take out $2,350 in a meaningful way we conclude that palladium will have a bearish bias in 2021.
Our #palladium #forecast for 2021 has a bearish bias, contrary to our bullish forecast in the years prior to 2021. Our pivot points are $2350 and $2150. The very important day for palladium is March 15th, 2021, this is why!… Click To Tweet
So we identified $2,350 as the ‘pivot’ point.
However in the unlikely event of palladium rising above $2,500 we know it is headed for a very bullish outcome in 2021.
Palladium predictions leading indicator #1
This first leading indicator for our palladium prediction is the total number of ounces of palladium held in all palladium ETFs combined (globally).
This indicator shows (left part of the chart) that there is continuously less physical palladium held in all ETFs.
According to our viewpoint there is no supply shortage similar to the one in 2020 (which resulted in a bullish year).
Supply/demand does NOT forecast anything bullish in the context of our palladium price forecast 2021.
Palladium predictions leading indicator #2
Our 2nd palladium price forecast is the palladium to gold ratio (the 3d panel on below chart).
This is the 2nd time in 50 years that palladium to gold rises above 1x.
Interestingly, as we head into 2021, the palladium to gold ratio is still rising.
This clearly has a bullish bias in favor of palladium. Now as this is a ratio we have to consider 2 components: both the palladium price AND the gold price.
So with a constant gold price, and a rising palladium-to-gold ratio, it implies that palladium can remain stable and still remain above 1x.
Palladium price forecast with price target for 2021
With all that said our leading indicators have a clear bearish bias!
Let’s turn to the palladium charts now, in a top down approach.
The monthly palladium chart shows this important pivot point we were talking about before. The $2,350 level is being tested at the time of writing, and previous all-time highs are right below this level (around $2,150).
Going forward the situation is simple: $2,350 followed by $2,150 will act as heavy resistance, and palladium will either pivot around $2,150 OR fall much lower (in case $2,150 cannot hold).
When we zoom int we see a really interesting picture for our palladium forecast 2021: March of 2021 might be a very important month, particularly March 15th, 2021.
We see a bearish topping pattern in palladium. And this bearish pattern interacts with the green rising channel exactly on March 15th, 2021.
How to read this: if palladium falls below 2,000 after March 15th, 2021, we will see much (MUCH) lower palladium prices in 2021.
The opposite is true as well: if palladium breaks above this bearish topping pattern, which is $2,350 (our pivot point for 2021) it will continue to be bullish, especially if it also succeeds in staying above $2,500.
Palladium price forecast attention point
There is one quote from the palladium market analysis article from Reuters discussed in this forecast that requires attention:
The market also moved deeper into backwardation, a situation associated with supply tightness when contracts for metal for near-term delivery are more expensive than later-dated ones.
Watch out with backwardation at a pivot point. We want to be clear that this may be a lagging indicator. It can also be the fuel.
This quote (data point) just confirms our black and white thinking when it comes to palladium: either backwardation is priced in, or it will push palladium above its pivot point. In the latter case we will see a fast move higher.