Palladium May Decline on ‘Trend Momentum’: Technical Analysis

Palladium, which yesterday had its biggest drop this year, may decline an additional 7.8 percent, according to technical analysis by Shaun Osborne, the chief foreign-exchange strategist at TD Securities Inc.

Prices may drop to $600 an ounce in the next few weeks after yesterday falling below the 100-day moving average for the first time since early January, a move some investors view as a signal for further declines, Osborne said. The measure is near $667. The metal is also below its 55-day and 200-day averages, adding to the bearish signs, he said.

“We are below the major moving averages,” Osborne said by telephone from Toronto. “The trend momentum is bearish.”

Yesterday, palladium futures for June delivery slumped 5.5 percent to $651.05, the biggest decline since Dec. 14, on the New York Mercantile Exchange. Prices for the metal, mainly used in auto-exhaust catalysts and jewelry, have dropped 8.1 percent this month on signs of slowing growth.

“The market seems to go up the stairs and down the elevator shaft in terms of its move,” Osborne said.

In technical analysis, investors and analysts study charts of trading patterns and prices to predict changes in a security, commodity, currency or index.

To contact the reporter on this story: Debarati Roy in New York at droy5@bloomberg.net

To contact the editor responsible for this story: Steve Stroth at sstroth@bloomberg.net

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