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Are palladium and platinum on the cusp of a bull run?

Having touched respective two and one-year lows, palladium and platinum have staged mini-resurgences, drawing attention to the possibility of a more sustained move upwards.

At the time of writing, the palladium price per ounce is $2,058, having climbed as high as $2,100 yesterday. Platinum is at $1,017, after retreating somewhat from the $1,030 mark it reached on Friday.

Depending on whether one takes a fundamental or technical perspective, it could go either way from here.

Palladium’s main purpose is to purify emissions for gas engines, while platinum performs the same function for diesel cars.

The demand outlook for both platinum-group metals is unclear as the worldwide semiconductor shortage continues to drag on car production.

“Fundamentals haven’t changed much with the auto sector continuing to face challenges due to micro-chip shortage. Until we see auto production recovering meaningfully, which will depend on availability of semiconductors, we expect PGMs (platinum group metals) to remain volatile,” said PGMs analyst Soni Kumari of ANZ.

So, will palladium’s recovery have any legs?

Its next target is $2,400. If it holds around that level then that could bode well for its longer-term prospects, says Sunil Kumar Dixit, the chief technical strategist at skcharting.com.

What about platinum?

“Going forward, the weekly chart for spot palladium shows prices are likely to be supported by the 100-SMA of $985. This will help the metal to spend some time for accumulation and consolidation between the $985 support and $1,040 resistance,” said Dixit.

“Breaking and sustaining above $1,040 should be followed by further upside attempts at $1,080. We see platinum reclaiming the $1,080-$1,110-$1,140 levels over an extended period of time, subject to prices holding above the 100-week SMA of $985 for the time being. Breaking below $893 can invalidate the theory.”

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