Palladium extended its correction from the recent highs above $2500 registered in the first week of January; still, as long the price is above $2000, there is no risk of the bear market. Worries over a new pandemic wave in China together with new lockdowns worldwide, could add further pressure on Palladium price.
Fundamental analysis: The decline in business activity could add further pressure on Palladium price
Risk aversion will likely prevail in the upcoming days as fresh COVID-19 outbreaks in China continue to worry investors. Palladium price remains in a bull market, but the decline in business activity worldwide indicates that the price of this precious metal could fall from the current price level.
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Some analysts say that a vaccine immunization will not soon end the Covid-19 crisis and let countries return to the growth path.
President of the European Central Bank, Christine Lagarde, said last week that the stimulus program would continue until March 2022. Christine Lagarde also said that there is no need to expand stimulus, but the current policy would remain accommodative.
The U.S. Federal Reserve will have a monetary policy meeting this Wednesday, and according to analysts, FED will keep its monetary policy unchanged. Joe Biden was inaugurated as the 46th U.S. president last week, and he immediately signed several orders to boost the fight against the coronavirus.
“The United States is the hardest-hit by COVID-19, with 24.70 million cases and 413,775 deaths by midnight Friday. Over the past week, 3,089 Americans have died of the disease on average, while 20 U.S. states reported record deaths this month,” said Francis Collins, director of the U.S. National Institutes of Health.
Palladium is used in the automotive industry, where it acts as a catalytic converter, and every negative news that is connected with pandemic has a bad influence on its price. Many automobile companies have seen revenues drop by double digits as the automobile industry has been affected significantly by the pandemic crisis.
Technical analysis: Palladium price remains under pressure
This precious metal price is currently below the $2400 level, and sentiment for palladium remains bearish for the next trading week. Worry because of the sluggish economic growth amid the ongoing pandemic continue to dominate the financial markets.
The important support levels are $2300, $2200, and $2000, $2500 and $2600 represent the resistance levels. If the price jumps above $2500, it would be a signal to buy palladium, and we have the open way to $2550.
Rising above $2600 confirms this precious metal’s bullish trend, and the next price target could be around $2700. On the other side, if the price falls below $2300, it would be a strong “sell” signal, and we have the open way to $2200.
Palladium extended its correction from the recent highs above $2500 as fresh COVID-19 outbreaks in China continue to worry investors. Palladium price remains under pressure, and if the price falls below $2300, it would be a strong “sell” signal, and we have the open way to $2200.