Recently, I've been observing the trends in the precious metals market and found palladium quite interesting. Many people may not have as deep an understanding of it as gold, but in fact, palladium's importance in industrial applications is not to be underestimated.

Speaking of palladium's uses, the main one is in the automotive sector, accounting for over 80%. It is a key material in catalytic converters, effectively reducing emissions from internal combustion engines, which is why demand for palladium has remained relatively stable in recent years. However, with the rising penetration of electric vehicles (now accounting for 22-25% globally), this has indeed put pressure on the demand for traditional automotive catalysts.

On the supply side, global palladium production is mainly concentrated in Russia and South Africa. In recent years, South Africa has experienced fluctuations due to power issues and strikes, while Russia has faced some restrictions. The supply uncertainty, coupled with structural changes in demand, has caused palladium prices to fluctuate over the past few years.

A review of historical trends shows this clearly. From 2017 to 2019 was a clear bull market, with prices rising from $730 to $1,900, a gain of over 160% in three years. Then, in 2020, due to the pandemic impact, prices briefly fell to $1,460, but with economic recovery and ongoing supply bottlenecks, prices rebounded to a record high of $3,017 in 2021. The Russia-Ukraine war in 2022 pushed prices even higher, reaching a peak of $4,440. However, as electric vehicle penetration deepened and the global economy slowed, prices retreated again.

By the first half of 2025, palladium prices showed a generally weak trend. At the start of the year, around $1,140, they surged to $1,260 in March, but due to rising EV share and sluggish car sales, they fell to $1,030-$1,080 in May. Although there was a rebound in June, the overall decline for the year exceeded 10%.

The underlying logic here is also clear—structural demand is weakening. As the EV share surpasses 25% (according to Bloomberg NEF forecasts), demand for traditional automotive catalytic converters further declines. Car sales growth in Europe and China is also slowing, which puts additional pressure on actual palladium demand. However, supply remains relatively stable, and investors are more focused on safe-haven assets like gold and silver.

From an investment perspective, palladium's appeal lies in its volatility. Compared to gold and silver, palladium reacts more sensitively to supply and demand changes, with larger price swings, providing opportunities for short- to medium-term trading. Additionally, as an inflation hedge, it performs well when the dollar depreciates. Plus, over 80% of palladium is used in automotive catalytic converters, providing a solid fundamental support due to this rigid demand.

If you want to participate in palladium trading, the simplest way is through Contracts for Difference (CFDs). Compared to futures, which require high capital thresholds and have delivery dates, CFDs are more flexible, with minimum trading sizes as low as 0.1 lots, tradable 24/7, supporting both long and short positions. They also come with risk management tools like stop-loss and take-profit, making them more friendly for retail investors.

However, it’s important to note that while palladium prices are volatile, this also entails significant risks. Based on baseline scenarios, in the second half of 2025, the average palladium price may fluctuate between $1,050 and $1,150. If events like Russian export restrictions or South African mine disruptions occur, prices could spike to $1,300-$1,400 in the short term; conversely, if the Chinese and European auto markets weaken further, prices could fall below $1,000. Therefore, thorough research is essential before trading, using technical indicators like MACD and RSI to identify good entry points, and setting reasonable stop-loss and take-profit levels.