Volatility in Palladium Triggers Client Interest as Activity Picks Up

Financial traders have been eyeing new opportunities in unpopular precious metals contracts as events heat up in the Russia-Ukraine crisis.

Financial services firms operating in the FX and CFD derivatives space have been witnessing requests from traders looking to speculate on the volatile palladium markets. A number of providers have added the instrument to their product list as retail traders diversify their portfolios.

Palladium has suffered during the recent turmoil impacting Russia and Ukraine. Metal, an uncommon instrument for traditional retail traders, has seen prices skyrocket on the back of uncertainty in the region. Metal has seen an increase in the number of brokers offering the instrument with trading volumes also rising.

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Alfonso Esparza, a Senior Currency Strategist at OANDA, commented to Forex Magnates about the recent changes in the movements of metal: “Palladium recently broke through a 13-year high after the Russian army was accused of multiple incursions into Ukrainian territory.

Russia is the world’s largest producer of palladium with 40% of supply. Gold and palladium were seen as safe havens by investors as tensions rose in the Russia-Ukraine conflict.”

With prices spiralling out of control, FX brokers have been on the receiving end of trading activity. Australian regulated broker-dealer, Pepperstone, was the latest provider to enhance its metals offering with the launch of palladium CFDs.

Alfonso Esparza
Alfonso Esparza

The move to extend its product range comes as no surprise to participants in the industry who have seen an increase in trading volumes in the metal.

Courtney Gibson, Vice-President of Trading, OANDA Corporation, explained about the uptake in activity with the Canadian origin broker: “Since we introduced palladium on fxTrade, we’ve seen growing interest from our customers. As a recent addition, and one that hasn’t hit the mainstream yet, our XPD instrument provides traders with a new investment opportunity.”

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OANDA introduced the product in 2012 along with GAIN Capital. Although gold and silver are the most prominent metals contracts traded, financial traders have joined the Palladium bandwagon in light of the recent events.

A spokesperson for Pepperstone spoke about the firm’s new product launch, saying in an emailed interview: “We are seeing an increased interest in metals and exotic currencies as traditional currency pairs such as the EURUSD and GBPUSD have experienced lower volatility.”

FX brokers offer the contract either as an underlying of the spot or futures contract. However, for the benefit of brokerage firms, a leading US-based liquidity provider, Advanced Markets, launched the palladium contract earlier this year, thus allowing brokers to offset clients whose flow they cannot manage internally.

Anthony Brocco, Founder & Chairman at Advanced Markets, commented to Forex Magnates: “We offer Palladium, Platinum, Gold and Silver. It is offered through several of our banks as a spot product.”

Anthony Brocco
Anthony Brocco

Analysts have mixed views on the future price trends, Mr. Esparza added: “Going forward the metal is under threat from three forces: European sanctions resulting from Ukrainian tensions, End of quantitative easing (QE) in the United States and Inflation trends around the world.”

Forex Magnates believes more FX providers will include the contract on their platforms as client interest in volatile instruments continues during a general slowdown across major global markets.


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