(Bloomberg) -- Palladium surged to the highest in a month as traders bought back their bearish bets amid restocking activity by automakers.

Palladium – mostly used to curb emissions from gasoline vehicles — has been under pressure this year as supply outpaces demand, which has weakened on the rising share of electric vehicle fleets in the global auto market. EVs don’t need catalytic converters to filter exhaust fumes.

“Funds may be forced to cover as automakers are replenishing catalyst supply, so the short end is getting bought,” said Bart Melek, global head of commodity strategy at TD Securities. 

Hedge funds and money managers have been bearish on palladium so far this year, and in the week ending June 11, their net short wagers stood at the highest level on record in data going back to December 2009, according to CFTC data. 

Palladium surged as much as 11% to $1,029.46 an ounce before paring some gains to trade at $964.07 as of 12:50 p.m. in New York. The rally trimmed the year-to-date loss to 12%.

©2024 Bloomberg L.P.