2014.08.0703:08:47UTC+00Palladium bull run under pressure

The best performing precious metal of the year is finally facing downward pressure with investors starting to cash out.

Palladium reached its highest value in 14 years just three weeks ago but has since fallen by 4% and has been beaten by other metals such as platinum, gold, and silver. It lost another 0.9% on Wednesday for a price per troy ounce of $835.90.

According to analysts, there is great fundamental influence applying the pressure except for investors raking in the profits of their large positions. Macquarie’s Matthew Turner says that, “Nothing on the supply and demand side would suggest weaker prices.” The automobile industry, which is where palladium is commonly used, remained healthy with strong sales from the US and Europe .

Palladium emerged as a favorite for precious metal commodity traders due to a surging automotive sector and the launch of an exchange traded product backed by the meal. Prices went up by 18% since the beginning of 2014 compared to platinum’s 6.8%, gold’s 9%, and silver’s 1.4%.

Analyst Joni Teves from UBS believes the drop in prices could be attributed to bull traders becoming nervous and exiting the market. She explained that, “Given positioning, it is understandable that longs are getting nervous and concerns are shifting towards the downside.” She warned, however, that prices could get volatile if a rush to exit due to concerns over its low liquidity is created. New investors may benefit should a similar clearout scenario happen.

Palladium is forecast to benefit should tensions between Russia and the rest of the world escalate. Russia produces 39% of the world’s palladium which will keep prices supported since an oversupply was initially predicted.