Renowned Senior Commodity Strategist, Daniel Ghali, foresees a potential surge in palladium prices due to algorithmic buying activity.
According to Ghali, prices need to surpass $1000/oz to trigger a significant buying program. With discretionary traders holding a substantial net short position, there is a high likelihood of increased buying in the current market conditions. Additionally, recent trends indicate that discretionary shorts are facing pressure, unlike previous scenarios where they had a safety net of paper profits.
The aggregate entry price for discretionary shorts since May 2023 is estimated at $1010/oz. However, more recent shorts are in a more precarious position, with a weighted-average entry price of $940/oz for those entering since May 2024, and only $915/oz for the latest round of short-acquisitions since July.
As a result, discretionary shorts are now underwater, creating the potential for a significant price surge. This situation is further exacerbated by the low stockpile in CME vaults compared to the open interest in paper markets.
Analysis:
In summary, the expert analysis suggests that palladium prices are poised for a substantial increase due to the vulnerability of discretionary shorts. Investors should monitor market developments closely and consider the implications for their investment portfolios. This potential price surge could have significant impacts on the financial landscape, making it crucial for individuals to stay informed and make informed decisions regarding their finances.