The US has asked G-7 leaders to sanction Russian palladium and titanium. This is not the first time the idea has been proposed, but Eurozone countries have previously been less lukewarm to the notion. Russia produces more than 40% of the global supply, and even with changing conditions, it would be difficult to sanction the metal. However, since then, the demand for palladium has declined, as has its price. Platinum can serve as a substitute in the auto industry, and the Russia-Ukraine war has pushed companies to use more platinum instead of palladium. This shift could potentially open the door to future sanctions. 

(Managed Money Positions and ETF Holdings of Palladium) 

©Bloomberg 

Despite the increased use of platinum, sanctioning palladium would have serious consequences for its price. Financial markets seem to be preparing for a trend change. Since the second half of 2023, ETF Palladium holdings have been gradually increasing, and in the past few months, this trend has accelerated. Since the start of September, net managed money positions have also risen significantly, although they remain in negative territory. 

(Possible Incoming Breakout for XPDUSD) 

©Bloomberg 

XPDUSD climbed above its moving averages in September and is now using them as support. A bottom pattern has formed between 850 and 1120 since early 2024, and with the help of the moving averages, palladium is currently attempting to break through the 1120 resistance. Higher lows since August, support from the moving averages, rising ETF holdings, increasing managed money positions, and a favorable news flow could create a “perfect storm” for a potential breakout in XPDUSD. However, traders should remain cautious, as long-term downward pressure is still in play. Additionally, sanctioning Russian supply could be challenging, especially for the Eurozone, where all 24 member states must approve such measures.