JOHANNESBURG – The palladium rally continues to defy all expectations.

The silvery-white precious metal, which is used in catalytic converters, has been on a tear this year that shows no signs of slowing down. It’s already notched a 20 percent gain for 2020. On Thursday, prices rallied 5,3 percent and surpassed $2 380 an ounce.

The gains are surprising even the most seasoned market watchers, who say there’s little chance that tight supply conditions will ease. South Africa, a major producer, reported a sharp drop in platinum-group metal production in November. Adding to the bullish mood was the US-China trade truce and record car sales in Europe.

“The dynamics are so strong. Nobody can tell me that this is just fundamentals,” said Commerzbank analyst Carsten Fritsch. “This is already becoming a bubble.”

=Palladium is up 69 percent in the past year, due to a combination of tight supply conditions as stricter emissions targets force automakers to use more of the metal in catalytic converters.

Still, market technicals are stretched and some analysts say a sharp and brief retreat is likely to happen. Palladium’s 14-day relative strength has held above 80 for seven days.

Ilya Spivak, a strategist at DailyFX, said he’s watching for prices to break and close below $2 120 as a confirmation of a pullback.

“It’s overbought but ignoring it,” said Rhona O’Connell, head of market analysis for EMEA and Asia at INTL FCStone.