I know Palmer has taken a few spot-kicks already this season but this one was on a different level, because of what was at stake against his former club, with basically the last kick of an absolutely classic Premier League game.
There was huge pressure on him, knowing it all came down to whether he scored or missed, and with millions watching around the world. Yet he still stepped up and delivered.
He is only 21 and had never taken a first-team penalty before he moved to Stamford Bridge in the summer but, if he was feeling at all nervous, you would never have known it from the way he stuck it away - Ederson had absolutely no chance.
It was a great story for Palmer personally, to put away an important penalty like that against the manager who decided to sell him, and he was not the only Chelsea player who played like they had a point to prove, for various reasons.
Raheem Sterling looked right on it as well, and kept running at his man for the whole game, wherever he was on the pitch. He was superb too.
For whatever reason, it appears Gareth Southgate does not believe Sterling is good enough to get in his England squad, but that performance was the perfect answer to anyone who doubts him.
Fearless Chelsea get what they deserve
I felt like a draw was the fairest result on Sunday, because neither team deserved to lose a game as good as that.
It had a bit of everything - great goals, mistakes, plus brilliant skill and outstanding individual performance from players on both sides, as well some terrible weather.
So many times we see teams sit back against City and almost wait to be beaten, but instead Chelsea went at them for the entire game.
From the off, their attitude was fantastic and it didn't change whatever happened, good or bad. While Mauricio Pochettino's side were behind three times, their heads never dropped and they got their reward in the end.
If you are going to go toe-to-toe with City like that then you have got to be at the top of your game - be totally committed and believe in what you are doing.
Chelsea were relentless, and it worked for them. It's been a very good week for them, firstly to get that dramatic win at Tottenham and then to follow that up by being as impressive as they were here.
Yes, they were very open in midfield at times and were punished for it, but they actually pressed City really well and forced them into mistakes.
A three-way title race
A year ago, it was a little unexpected to see Arsenal five points clear of City when the Premier League paused for six weeks for the World Cup, with Newcastle in third place.
The current top three is a lot less surprising.
Yes, City dropped points at Stamford Bridge, but they are still top of the table heading into the international break, which is probably where most people expected them to be.
The same goes for Liverpool and the Gunners, who are both a point behind them. I've always thought it will be those three battling it out at the top for the whole season, and I still don't see anyone different getting in there.
To be beaten by two stoppage-time goals at Molineux on Saturday was a cruel way for Tottenham to suffer their second defeat of the week, but I never expected them to challenge for the title anyway.
Even after losing to Chelsea and then Wolves, Spurs have still done much better than I expected. Their aim for this campaign has to be to finish fourth or fifth, which might be enough to secure Champions League football for next season, and I don't feel that changed despite their strong start.
Aston Villa are up there too, and are clearly a good side who will be a match for most, particularly at home, but again I still don't see them as title contenders - although I don't think anyone will relish a trip to Villa Park.
Man Utd need to improve, Newcastle need a rest
The other team in the top six are Manchester United, who have picked more points in their past five games than any other top-flight team.
United have done that despite not playing particularly well, or being great to watch, and I don't really see either changing even when some of their injured players come back.
Getting results is the most important thing, and having that kind of winning mentality is an obvious positive, but performances matter too - and United are going to have to improve a lot if they want to get in and around the top four.
Newcastle need a lift too. Saturday's defeat at Bournemouth was their first in the league since 2 September but it looked a game too far for them, and they weren't anywhere near their best.
Eddie Howe's side have got a lot of injuries and suspensions to contend with but they didn't deserve anything against the Cherries, who were the better team from start to finish.
Newcastle looked really flat and very tired, and they probably need the international break more than anyone in terms of resting some players and getting others back to fitness.
It was always going to be a big ask for them to cope with Champions League football and challenge for the top four again.
They are still giving it a good go, and have reached the Carabao Cup quarter-finals too, but at the moment it looks like fighting on three fronts has caught up with them.
Alan Shearer was speaking to BBC Sport's Chris Bevan.
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