We present a medium-term investment review of the XPD/USD pair.

The period of uncertainty in the market continues, caused by the situation with interest rates of the world’s leading regulators, while the precious metals sector remains a means of protecting and saving investment assets. However, industrial metals, which include palladium, platinum, and others, are lagging behind the general dynamics, although recently, there has been news that can dramatically change the usual trend and support the asset.

Thus, at the G7 meeting held last week, US representatives proposed that partners consider the possibility of introducing sanctions against the supply of palladium and titanium from the Russian Federation, and several meetings have already been scheduled to discuss the parameters of these restrictions. According to the US Geological Survey report, 210.0 tons of palladium were produced in 2023, of which the American share is 9.8 tons, Canadian – 16.0 tons, and Russian – 92.0 tons, almost half of the world’s volume. The US authorities’ intention to eliminate a key competitor from the market and occupy the vacated niche of EU supplies was expected. However, previously, the EU purchased up to 29.0% of all metal supplied from the Russian Federation to replace which American capabilities are insufficient. Thus, the sanctions policy will cause a significant palladium deficit, which is indispensable in electronics and automobile catalysts production, and, according to experts, the quotes may grow by more than 50.0%.

After the publication of this information, the palladium price increased significantly, allowing it to again become the leader in the spread position with its main competitor – platinum. The difference is already 170.0 dollars in favor of palladium, which a month ago was inferior to about 50.0 dollars.

Technical indicators support growth. On the weekly chart, the price left the downward channel with dynamic boundaries of 980.00–660.00 and is retreating from the resistance line.

Currently, the price is holding at the key resistance level of 1220.00 (high of December 17, 2023). In case of consolidation above the initial correction level of 23.6% Fibonacci at 1343.00, the positive dynamics will continue, and the correction will begin.

Let us consider the key levels on the daily chart.

According to the chart, after the consistent breakout of dome highs, where opposite trading volumes were concentrated, the asset is approaching the initial Fibonacci correction level of 23.6% at 1343.00, a key marker for the start of the correction. In case of a decline and reaching the year’s low of 840.00, the upward scenario will either be canceled or postponed, and it is better to liquidate open buy positions. The target zone is around ​​the full Fibonacci correction level of 61.8% at 2180.00. After reaching, it is better to fix the profit on open long positions.

Let us assess the entry levels in more detail on the four-hour chart.

The entry level for buy transactions is at the initial Fibonacci correction of 23.6% at 1343.00, for the breakout of which the market may need several days. Nevertheless, it is possible to open riskier buy positions since the daily chart shows a breakout of the channel resistance line with subsequent reverse testing. Technically the trend has already reversed, and on the price’s way to the target of 2180.00, there are only Fibonacci correction levels left.

Given the average daily volatility of the XPD/USD pair, which has increased significantly in recent days to 1543.0 points, the movement to the target zone of 2180.00 may take approximately 59 trading sessions, and with an increase in volatility in metals, this time may be reduced to 40 trading days.