High-growth palladium is back in the spotlight, with the potential for a breakthrough as the market faces a huge supply shortage in 2021.

Palladium posted strong gains on Tuesday and Wednesday after Russian mining giant and the world's largest palladium producer Norilsk Nickel said its production of nickel, copper, platinum, and palladium could be 15-20% lower than the initial forecast.

In connection with the closure of the mines in February, due to water problems, Norilsk Nickel said that it expects the production of platinum group metals to fall by 710,000 ounces.

The palladium market is already facing a significant supply shortage, and the latest news only makes the situation worse.

Prices for platinum group metals (PGM) may rise further due to limited physical supply. Moreover, the situation may soon worsen even further, as new car sales are likely to rise when all restrictions are lifted in Europe.

Looking ahead to the green energy transition, investors should definitely pay attention to these two metals.

Even though palladium and platinum are precious metals, almost all the demand for them comes from industrial production. It is an important metal in gasoline engine catalytic converters to reduce harmful exhaust emissions. Palladium is used in gasoline engines and platinum is used in diesel cars.

According to analysts at Metals Focus, palladium prices will rise to $3,000 per ounce.

With growing expectations for a robust global economic recovery, platinum group metals should continue to outperform gold's appeal with strong industrial demand.