Precious Metals Palladium Price Trends: From Supply and Demand Imbalance to Investment Opportunities in 2025

Palladium (鈀金) as a “dark horse” in the precious metals market, due to its tight supply, rigid demand, and price volatility characteristics, is attracting increasing investor attention. As an element with significant industrial application value, the investment logic of palladium is entirely different from traditional safe-haven assets. This article will analyze the price trajectory of palladium over the past decade, the current market landscape, and forecast the investment prospects for 2025 and beyond.

The Industrial Identity of Palladium: Why Is Supply Shortage Inevitable?

Palladium was discovered in 1803 by British chemist William Hyde Wollaston in platinum ore. Named after the Greek goddess of wisdom Athena (Pallas-Athena), the name Palladium reflects human regard for this rare metal.

From a property perspective, palladium features high hardness and strong stability, making it a highly valuable industrial precious metal. Market research indicates that over 80%-85% of palladium is used in automotive catalytic converters to reduce internal combustion engine exhaust emissions. As global environmental policies become increasingly stringent (such as China’s “National VI” and the EU’s “Euro 6” standards), demand for palladium continues to grow.

Fields such as electronics, dentistry, and metal alloys are also important application scenarios for palladium. Many white K-gold jewelry pieces on the market are actually alloys of platinum and palladium. This rigid demand ensures the fundamental support for palladium’s fundamentals.

However, the supply side faces severe challenges. Russia is the world’s largest producer of palladium, followed by South Africa, but both major production areas face capacity bottlenecks: Russia’s reserves are declining, and there is limited room for increased production; South Africa suffers from intermittent mine closures due to power crises, along with frequent labor disputes, leading to a continuous decline in output. This lack of supply elasticity coupled with rising rigid demand is the fundamental driver pushing palladium prices higher.

A Decade of Trajectory: How Has Palladium Price Shaped the Precious Metal Story?

Looking back from 2017 to 2019, palladium experienced a dazzling bull market. During this period, global automotive industry demands for emission controls kept increasing, leading to a surge in demand for palladium in catalytic converters. Meanwhile, South Africa’s power crisis persisted, and Russian capacity growth stagnated. The imbalance of supply and demand drove palladium prices from about $730 per ounce in early 2017 to $1,900 per ounce at the end of 2019, a rise of over 160% in three years, outperforming most other precious metals.

The turning point came in 2020. The COVID-19 pandemic caused a sharp decline in global economic activity, severely impacting the automotive industry, and palladium demand sharply contracted, with prices dropping to around $1,460 per ounce. However, as countries launched large-scale fiscal and monetary stimulus policies, the automotive industry rebounded rapidly. Coupled with slow restart progress at South African mines and disrupted logistics systems, palladium prices rebounded strongly in 2021, reaching a historic high of $3,017 per ounce in May.

In early 2022, the outbreak of the Russia-Ukraine war heightened concerns over supply disruptions from Russia, pushing palladium prices to an extreme high of $4,440 per ounce. Subsequently, the rising penetration of electric vehicles shifted demand expectations, and combined with a global economic slowdown, palladium prices retreated sharply from the high. Between 2023 and 2025, palladium prices fluctuated within the range of $1,500-$2,200 per ounce, with market opinions divided on its outlook.

The First Half of 2025: Current Situation and Key Turning Points

As of June 2025, palladium prices generally show a volatile weakening trend. Starting the year at $1,140, a brief rebound to $1,260 occurred in March, but subsequent multiple factors suppressed the price, falling to lows of $1,030-$1,080 in May. Although there was a technical rebound to $1,110 in June, the annual decline exceeded 10%.

The core factors driving the current palladium price trend include:

Structural Demand Weakening: According to data from the (International Energy Agency (IEA)), the global electric vehicle market share is expected to reach 22%-25% by 2025, implying a shrinking demand for catalytic converters as traditional fuel vehicles decline. Slowing sales growth in Europe and China directly impacts the actual demand for palladium.

Supply Landscape Stabilization: Despite international sanctions, Russia maintains exports through neutral markets; South Africa’s improved power supply allows gradual recovery of mine capacity. The relative stability on the supply side weakens the upward support for prices.

Market Sentiment Remains Bearish: Investment funds continue to favor traditional safe-haven assets like gold and silver, benefiting from geopolitical tensions in the Middle East and global central banks’ gold-buying spree. Palladium, being more industrial in nature, tends to be marginalized during risk aversion periods, with ETF holdings and net long futures positions continuing to decline.

Outlook for the Second Half of 2025: When Will a Turning Point Occur?

Looking into the second half of 2025, the palladium market is expected to remain dominated by structural demand weakness. As electric vehicle penetration continues to rise and traditional car sales growth slows, industrial demand for palladium is unlikely to see significant improvement.

Based on the baseline scenario from the (World Palladium Investment Consortium (WPIC)) and Citi’s commodities research (with stable supply and global GDP growth of 2.5%-3%), the palladium average price is forecasted to be in the $1,050-$1,150 range. From a technical perspective, if prices reach the $900 long-term support level, a technical rebound could be triggered.

In risk scenarios, if Russian exports are hindered, South African mine difficulties worsen, or hydrogen energy technology achieves commercial breakthroughs, palladium prices could spike in the short term, challenging the $1,300-$1,400 high; conversely, if China and Europe’s automotive markets weaken further or the US dollar remains strong, palladium could fall below the thousand-dollar mark, testing the $900-$950 support zone.

The Investment Logic of Palladium: Risks and Opportunities Coexist

Although palladium does not possess the traditional safe-haven attributes of gold, its unique investment features are worth noting:

Inflation Hedge Function: Priced in USD, palladium tends to appreciate when the USD depreciates, providing inflation protection for investors.

Fundamental Support from Supply and Demand: Major economies like the US and China continue to develop their automotive industries, ensuring long-term demand for palladium. Despite short-term demand pressures, reliance on palladium in catalytic converters remains difficult to change.

High Price Volatility: Compared to gold and silver, palladium reacts more sensitively to supply-demand changes, with larger fluctuations, offering abundant trading opportunities for medium- and short-term traders.

Industrial Rigid Demand: Over 80% of palladium’s uses are in automotive catalytic converters, where it is nearly impossible for other elements to fully substitute, ensuring fundamental resilience.

CFD Trading: A Flexible Choice for Investing in Palladium

Compared to futures contracts, which require large capital thresholds and face delivery date restrictions, CFD (Contract for Difference)( trading offers a more flexible way to invest in palladium.

CFD prices follow the spot price movements of the underlying asset, but investors do not need to hold physical palladium. This mode offers multiple advantages:

• Low Trading Threshold: Minimum trading volume is only 0.1 lot, suitable for all investors
• 24-Hour Trading: Not limited by market opening hours
• Two-Way Trading: Supports long (buy) and short (sell) positions, enabling flexible market responses
• Leverage via Margin: Small capital can control larger positions, amplifying profit potential
• Comprehensive Risk Management Tools: Built-in stop-loss and take-profit functions, with some platforms offering negative balance protection

Compared to physical holdings, futures, or spot investments, palladium CFD trading has the lowest entry barrier and highest liquidity, making it suitable for investors confident in price fluctuations.

Technical Analysis Methods Brief

In addition to fundamental analysis, technical indicators can provide reference signals for palladium trends:

Moving Average (MACD): Comparing short-term and long-term averages to judge momentum and trend reversals. A MACD bullish crossover often indicates upward potential.

Relative Strength Index (RSI): Measures price momentum strength. RSI above 70 suggests overbought conditions and potential correction; below 30 indicates oversold and possible rebound.

Combining these tools with fundamental analysis can help investors better assess trading opportunities for palladium.

Summary: The Practical Significance of Palladium Investment

As the “volatility king” among industrial metals, palladium faces structural demand pressures from electric vehicle transformation, as well as supply-side rigidity and geopolitical uncertainties. The price trend in the second half of 2025 is expected to fluctuate within the range of $1,050-$1,400. Investors should closely monitor electric vehicle penetration, supply conditions in major producing regions, and USD exchange rates.

For investors willing to accept volatility and equipped with technical analysis skills, palladium CFD trading offers a low-cost, flexible, and efficient participation channel. However, any investment decision should be based on thorough research and risk assessment.