UBS sees palladium prices dropping to $900 by end of 2024

Commodities

Published 04/23/2024, 09:56 AM

Updated 04/23/2024, 09:56 AM

UBS noted a shift in sentiment among option market players regarding palladium prices. Despite recent increases in net-long positions by non-commercial accounts, the outlook for palladium has turned negative. The changes in the market have resulted in a slight decrease in prices compared to the position on March 11.

The option market's sentiment has shifted, with a current marginal skew towards the downside. This is reflected in the cost of call and put options, which indicate the market's risk assessment. The risk reversal rate, which shows the volatility differential between call and put options, ranges from 0 to -5.2% for the upcoming one to six months.

UBS has forecasted a modest surplus in the palladium market, projecting an excess of 50,000 ounces, or 0.5% of demand, for this year. This surplus is expected to contribute to a downward trend in palladium prices, with a target of $900 per ounce by the end of 2024. The firm maintains a negative outlook on the metal's future pricing.

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