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Palladium Correction: Is it over?

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NEW YORK (Scrap Register): Palladium prices have corrected sharply lower and given up their premium to gold.

The spot metal was down $17.40 to $1,221.80 an ounce, while gold was up 40 cents to $1,237.45.

On Wednesday, palladium – boosted for some time now by strong demand for automotive catalysts – traded above gold for the first time since 2002.

Palladium hit a record high of near $1,260, before tumbling sharply Thursday.

 “In our opinion, the palladium market is much distorted at present; the spot price is some $30 higher than the price of the front-month futures contract (December),” Commerzbank added.

“What is more, short-term lease rates have surged to 25-30%. Like the falling forward curve, this is indicative of a tight market. Palladium ETFs [exchange-traded funds] registered outflows of 6,400 ounces yesterday – this is presumably related to the leasing transactions. In our view, the palladium price is too high despite the currently tight market, and we now see considerable correction potential.”

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