LONDON (Commodity Online): A rise of some 20% in palladium since the end of November has been fueled by short covering, said Commerzbank in a snippet. This is activity in which participants who previously sold are now buying to offset, or close, their positions.
Nymex March palladium has been as high as $689.90 so far Wednesday, its strongest level since Sept. 21.
“This is probably to compensate for the overly severe price drop in the four previous months during which palladium lost a third of its value. It is also interesting that the latest price rise was not accompanied by corresponding inflows into the ETFs--in fact, holdings of palladium ETFs have continued to fall, which would indicate that short coverings are the main driver of the climbing prices,” Commerzbank added.
In fact, the bank notes, the net-long position of non-commercial market players last week dropped to a 2½-year low, while short positions actually achieved the highest level since September 2005.