Stock of the day: Paladin Energy
Uranium stocks, including Paladin Energy’s, face volatility from supply-demand shifts, offering traders both risks and unique opportunities.
(AI video summary)
This video was created on 12 November for IG audiences by ausbiz.
ASX code: PDN
Understanding market volatility in uranium stocks
Paladin Energy, a uranium mining company, recently faced significant production challenges at its Lang Heinrich mine in Namibia, prompting a downward revision of its fiscal year (FY) 2025 production guidance. The target was lowered from 4 - 4.5 million pounds (lbs) to 3 - 3.6 million lbs due to operational difficulties, causing a sharp decline in its share price.
This highlights the risks in mining investments but also presents opportunities for traders who grasp the dynamics of uranium's supply and demand.
Supply and demand in uranium markets
Uranium markets are shaped by complex supply and demand factors. With rising global demand for nuclear power, uranium is a critical energy resource. However, supply constraints persist, with production cuts from major producers like Kazakhstan and operational issues at companies like Paladin.
The uranium market's lack of transparency, with spot prices not always reflecting real conditions, offers opportunities for traders who can anticipate price movements based on supply disruptions and demand increases.
Strategies for trading in volatile markets
Trading in volatile markets like uranium requires a strategic approach. The 50 - 80% rule suggests leading sectors can experience significant declines once trends reverse, with uranium stocks potentially dropping by 50% or more.
These declines can present buying opportunities if traders identify potential reversals. Monitoring technical indicators and market trends, such as moving averages and support levels, is crucial for informed decisions.
This information has been prepared by IG, a trading name of IG Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients.
CFDs are a leveraged products. CFD trading may not be suitable for everyone and can result in losses that exceed your initial deposit, so please ensure that you fully understand the risks involved.
Explore the markets with our free course
Learn how shares work – and discover the wide range of markets you can trade on – with IG Academy's free ’introducing the financial markets’ course.
Put learning into action
Try out what you’ve learned in this shares strategy article risk-free in your demo account.
Ready to trade shares?
Put the lessons in this article to use in a live account – upgrading is quick and easy.
- Trade over 16,000 popular global stocks
- Protect your capital with risk management tools
- React to breaking news with out-of-hours trading on 70 key US stocks
Inspired to trade?
Put your new knowledge into practice. Log in to your account now.
Live prices on most popular markets
- Forex
- Shares
- Indices
Prices above are subject to our website terms and agreements. Prices are indicative only. All shares prices are delayed by at least 15 mins.
